PANAVISION INC
S-4, 1998-05-04
PHOTOGRAPHIC EQUIPMENT & SUPPLIES
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<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1998
                                                     REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------
 
                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                                PANAVISION INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                       <C>                                       <C>
                DELAWARE                                    5043                                   13-3593063
    (STATE OR OTHER JURISDICTION OF             (PRIMARY STANDARD INDUSTRIAL                    (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)             CLASSIFICATION CODE NUMBER)                  IDENTIFICATION NUMBER)
</TABLE>
 
                            ------------------------

                                PANAVISION INC.
                              6219 DE SOTO AVENUE
                        WOODLAND HILLS, CALIFORNIA 91367
                                 (818) 316-1000
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

                                WILLIAM C. SCOTT
                                PANAVISION INC.
                          885 THIRD AVENUE--SUITE 3020
                            NEW YORK, NEW YORK 10022
                                 (212) 688-4748
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                            ------------------------
 
                        Copies of all Communications to:
 
CHRISTOPHER E. MANNO, ESQ.                        ALAN C. MYERS, ESQ.
 WILLKIE FARR & GALLAGHER              SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

   ONE CITICORP CENTER                             919 THIRD AVENUE
  153 EAST 53RD STREET                         NEW YORK, NEW YORK 10022
NEW YORK, NEW YORK 10022                           (212) 735-3000
    (212) 821-8000
 
                            ------------------------
 
     APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this Registration
Statement and upon consummation of the Merger as described herein.
 
     If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
the General Instruction G, check the following box: / /
 
     If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the effective registration statement for the
same offering. / /

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

                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
                                                                 PROPOSED
       TITLE OF EACH CLASS OF                                     MAXIMUM       PROPOSED MAXIMUM           AMOUNT
          SECURITIES TO BE                 AMOUNT TO BE       OFFERING PRICE        AGGREGATE                OF
           REGISTERED(1)                  REGISTERED(2)        PER SHARE(3)     OFFERING PRICE(3)   REGISTRATION FEE(4)
<S>                                    <C>                    <C>               <C>                 <C>
Common Stock, par
  value $0.01 per share.............        6,211,500             $27.00          $167,710,500             $4,025
</TABLE>
 
                                                        (Footnotes on next page)
 
     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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.

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

<PAGE>


(Footnotes from previous page)
 
(1) This Registration Statement relates to the common stock of the Registrant to
    be retained by holders of the Registrant's Common Stock in the proposed
    merger of PX Merger Corporation with and into the Registrant, with the
    Registrant continuing as the surviving corporation in the merger (the
    'Merger').
 
(2) Represents the number of shares of the Registrant's common stock that would
    be retained in the Merger by the holders thereof, assuming that all
    stockholders (other than Warburg Pincus Capital Company, L.P.) of the
    Registrant elect to retain their shares of common stock in the Merger.
 
(3) Estimated solely for the purpose of determining the registration fee in
    accordance with Rule 457(f)(1). The proposed maximum aggregate offering
    price is based upon the product of (i) 6,211,500, the total number of the
    Registrant's shares to be retained by the stockholders in the Merger,
    assuming that all stockholders (other than Warburg Pincus Capital Company,
    L.P.) of the Registrant elect to retain their shares of Common Stock in the
    Merger, and (ii) $27.00 in cash to be paid by the Registrant to stockholders
    for each share of the Registrant's common stock.
 
(4) Pursuant to Rule 457(b), the required fee of $33,543 is reduced by the fee
    of $29,518 previously paid on February 5, 1998 pursuant to Section
    14(g)(1)(A) of the Securities Exchange Act of 1934, as amended, and Rules
    0-11 and 14a-6(i) promulgated thereunder, in connection with the filing of
    preliminary proxy materials relating to the Merger as described herein, and
    has been credited against the registration fee payable in connection with
    this Registration Statement. Accordingly, a fee of $4,025 is payable with
    this filing.

<PAGE>

                                PANAVISION INC.
                              6219 DE SOTO AVENUE
                        WOODLAND HILLS, CALIFORNIA 91367
                                 (818) 316-1000
 
                                                                    May   , 1998
 
Dear Stockholders:
 
     You are cordially invited to a combined Annual and Special Meeting (the
'Meeting') of the stockholders of Panavision Inc., a Delaware corporation
('Panavision' or the 'Company'), which will be held at The Chase Manhattan Bank,
270 Park Avenue, 11th Floor, Conference Room C, New York, New York on June   ,
1998, at 10:00 a.m.
 
     At the Meeting, the Panavision stockholders will be asked to consider and
vote on a proposal to approve and adopt the Agreement of Recapitalization and
Merger, dated as of December 18, 1997 (the 'Recapitalization Agreement'), by and
among PX Holding Corporation, a Delaware corporation ('PX Holding'), PX Merger
Corporation, a Delaware corporation ('Merger Sub') and wholly owned subsidiary
of PX Holding, and Panavision. The Recapitalization Agreement provides, among
other things, for the merger of Merger Sub with and into Panavision (the
'Merger') pursuant to which each share of Panavision's common stock, $.01 par
value per share ('Panavision Common Stock'), issued and outstanding immediately
prior to the effective time of the Merger (other than shares of Panavision
Common Stock held by Warburg, Pincus Capital Company, L.P., a Delaware limited
partnership ('Warburg')) will be converted, at the election of the holder, which
election must be received by ChaseMellon Shareholder Services, L.L.C. at one of
the addresses listed on the Form of Election by 5:00 p.m., Eastern Time, on June
  , 1998, the day preceding the Meeting, into either (a) the right to receive
$27.00 in cash or (b) the right to retain one share of Panavision Common Stock.
Because at least 745,380 shares of Panavision Common Stock held by stockholders
other than Warburg (each such stockholder, a 'Holder'), representing 12% of such
Holders' shares, must be retained by the Holders either through election or
proration, the right to receive $27.00 in cash for each share of Panavision
Common Stock is subject to proration, as set forth in the Recapitalization
Agreement and described in the accompanying Proxy Statement.
 
     Pursuant to an Amended and Restated Voting and Stockholders Agreement,
dated as of April 16, 1998 (the 'Stockholders Agreement' and together with the
Recapitalization Agreement, and the transactions contemplated thereby, the
'Panavision Recapitalization'), by and among Warburg, Mafco Holdings Inc., a
Delaware corporation ('Mafco'), and Panavision, Warburg has agreed to exchange
11,190,960, shares of Panavision Common Stock, representing 88% of the
Panavision Common Stock that it owns, for Series A redeemable preferred stock of
the Company (the 'Redeemable Preferred Stock'), that shall be redeemed
immediately upon consummation of the Merger at a price equivalent to $26.50 per
share of Panavision Common Stock. To the extent fewer than 88% of the Holders'
shares of Panavision Common Stock are exchanged for cash, Warburg will increase
the number of shares of Panavision Common Stock it exchanges for Redeemable
Preferred Stock (or will sell such shares to PX Holding), up to the remainder of
its shares of Panavision Common Stock. Copies of the Recapitalization Agreement

and the Stockholders Agreement are attached as Annex I and Annex II,
respectively, to the accompanying Proxy Statement and are incorporated herein by
reference.
 
     As a result of the Recapitalization Agreement and the Stockholders
Agreement, PX Holding, a wholly owned subsidiary of Mafco, the sole stockholder
of which is Ronald O. Perelman, will acquire control of the Company. Assuming
Holders of at least 88% of the shares of Panavision Common Stock elect to
receive cash for their shares, PX Holding will own approximately 72% of the
issued and outstanding Panavision Common Stock, Warburg will own approximately
19% of the issued and outstanding Panavision Common Stock and the Holders will
own approximately 9% of the issued and outstanding Panavision Common Stock. In
the event that all Holders, other than the Company's directors, officers, key
employees and a trust established by an officer of the Company elect to retain
their shares of Panavision Common Stock, PX Holding will own approximately 59.1%
of the issued and outstanding Panavision Common Stock, the Holders will own
approximately 40.9% of the issued and outstanding Panavision Common Stock and
Warburg, after selling 1,741,283 shares of Panavision Common Stock to PX Holding
and after exchanging the remainder of its shares of Panavision Common Stock for
Redeemable Preferred Stock pursuant to the Stockholders Agreement, will not own
any of the issued and outstanding Panavision Common Stock. None of the Company's
directors, officers, and key employees and a

<PAGE>

trust established by an officer of the Company, who hold in the aggregate
2,199,100 shares of Panavision Common Stock (except that an officer of the
Company has indicated that he may transfer 120,000 of such shares to a
charitable organization), intend to elect to retain any of such shares. See
'SUMMARY--Effect of Panavision Recapitalization.'
 
     The current management of the Company is expected to remain with the
Company following the Merger. Additionally, upon consummation of the Merger,
three of the Company's current members of the Board of Directors, William C.
Scott, the Company's Chief Executive Officer and Chairman of the Board of
Directors, John S. Farrand, the Company's President and Chief Operating Officer
and Martin D. Payson will, if elected by the stockholders, continue to serve on
the Board of Directors.
 
     In connection with the Panavision Recapitalization, the Company expects to
(i) enter into a credit agreement with a maximum commitment amount of $340
million, (ii) receive approximately $144 million, already raised in a
transaction exempt from registration under the Securities Act of 1933, as
amended, pursuant to Rule 144A and Regulation S thereunder and assume
obligations under notes issued in connection therewith and (iii) receive an
equity contribution from PX Holding of approximately $154 million (collectively,
the 'Recapitalization Financings'). It is currently anticipated that the
Recapitalization Financings will be used to (i) fund the payment of the cash
consideration in the Merger, (ii) repay or repurchase certain indebtedness of
the Company, (iii) make cash payments for unexercised stock options, (iv) pay
the fees and expenses in connection with the Merger and the Recapitalization
Financings and (v) fund working capital requirements. As a result of the
Panavision Recapitalization, the Company on a pro forma basis will have a
substantial stockholders' deficit of approximately $220 million and a ratio of

debt to total capitalization of 1:6.
 
     In addition to the foregoing matter, at the Meeting, the Panavision
stockholders will be asked to consider and vote on proposals to (i) elect eight
members of the Company's Board of Directors to serve until the Company's next
annual meeting and until such directors' successors are duly elected and shall
have qualified, (ii) ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 1998 and (iii) transact such other business as may
properly come before the Meeting or any adjournment thereof.
 
     Under the Delaware General Corporation Law (the 'DGCL'), the affirmative
vote of the holders of a majority of the Panavision Common Stock outstanding on
April 8, 1998, will be required in order to approve and adopt the
Recapitalization Agreement, the affirmative vote of the holders of a plurality
of Panavision Common Stock present in person or represented by proxy at the
Meeting will be required to elect each of the nominees for election to the
Company's Board of Directors and the affirmative vote of the holders of a
majority of Panavision Common Stock present in person or represented by proxy at
the Meeting will be required to ratify the selection of Ernst & Young LLP as the
Company's independent auditors and approve or adopt other matters as may
properly be presented to holders of Panavision Common Stock at the Meeting. As
of the date hereof, Warburg is the beneficial owner, and has the power to vote
and dispose, of 12,717,000 shares of Panavision Common Stock, representing
approximately 67.2% of the issued and outstanding Panavision Common Stock.
PURSUANT TO THE STOCKHOLDERS AGREEMENT, WARBURG HAS AGREED, AMONG OTHER THINGS,
TO VOTE ITS SHARES IN FAVOR OF THE ADOPTION OF THE RECAPITALIZATION AGREEMENT.
ACCORDINGLY, APPROVAL OF THE RECAPITALIZATION AGREEMENT IS ASSURED REGARDLESS OF
THE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY.
 
     YOUR BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS UNANIMOUSLY
APPROVED THE RECAPITALIZATION AGREEMENT AND DETERMINED THAT THE RECAPITALIZATION
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST
INTERESTS OF PANAVISION AND ITS STOCKHOLDERS, AND RECOMMENDS THAT YOU VOTE FOR
APPROVAL AND ADOPTION OF THE RECAPITALIZATION AGREEMENT. In reaching its
determination, your Board of Directors considered, among other things, the
opinion of Goldman, Sachs & Co. ('Goldman Sachs'), as to the fairness, from a
financial point of view, of the consideration to be received in the Merger by
the Holders. Goldman Sachs' opinion is included as Annex III to the accompanying
Proxy Statement. You are urged to read the opinion in its entirety for further
information with respect to the assumptions made, matters considered and limits
of the review undertaken by Goldman Sachs.
 
                                       2

<PAGE>

     IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING,
WHETHER OR NOT YOU PLAN TO ATTEND PERSONALLY. THEREFORE, YOU SHOULD COMPLETE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING.
 
                                          Very truly yours,


                                          WILLIAM C. SCOTT
                                          Chairman and Chief Executive Officer
 
                                       3

<PAGE>

                                PANAVISION INC.
                              6219 DE SOTO AVENUE
                        WOODLAND HILLS, CALIFORNIA 91367
                                 (818) 316-1000
 
                            ------------------------
 
         NOTICE OF COMBINED ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON JUNE   , 1998
 
                            ------------------------
 
To the Stockholders of Panavision Inc.
 
     NOTICE IS HEREBY GIVEN that a combined Annual and Special Meeting of the
Stockholders (including any adjournments or postponements thereof, the
'Meeting') of Panavision Inc., a Delaware corporation ('Panavision' or the
'Company'), will be held at The Chase Manhattan Bank, 270 Park Avenue, 11th
Floor, Conference Room C, New York, New York on June    , 1998, at 10:00 a.m.,
for the following purposes, which are more fully described in the accompanying
Proxy Statement:
 
          1. To consider and vote upon a proposal to approve and adopt the
     Agreement of Recapitalization and Merger, dated as of December 18, 1997
     (the 'Recapitalization Agreement'), by and among PX Holding Corporation, a
     Delaware corporation ('PX Holding'), PX Merger Corporation, a Delaware
     corporation ('Merger Sub') and wholly owned subsidiary of PX Holding, and
     Panavision;
 
          2. To elect eight members of the Company's Board of Directors to serve
     until the Company's next annual meeting and until such directors'
     successors are duly elected and shall have qualified;
 
          3. To ratify the selection of Ernst & Young LLP as the Company's
     independent auditors for 1998; and
 
          4. To transact such other business as may properly come before the
     Meeting or any adjournment thereof.
 
     If the Recapitalization Agreement is approved and directors are elected at
the Meeting, the Meeting will be deemed to constitute the Company's 1998 annual
meeting. If the Recapitalization Agreement is not approved, the Merger is not
consummated or the nominees are not elected at the Meeting, an annual meeting of
stockholders for 1998 will be scheduled in the near future.
 
     YOUR BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS UNANIMOUSLY
APPROVED THE RECAPITALIZATION AGREEMENT AND DETERMINED THAT THE RECAPITALIZATION
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST
INTERESTS OF PANAVISION AND ITS STOCKHOLDERS, AND RECOMMENDS THAT YOU VOTE FOR
APPROVAL AND ADOPTION OF THE RECAPITALIZATION AGREEMENT. In reaching its
determination, your Board of Directors considered, among other things, the
opinion of Goldman, Sachs & Co. ('Goldman Sachs'), as to the fairness, from a

financial point of view, of the consideration to be received in the Merger by
the holders of Panavision Common Stock (other than Warburg, Pincus Capital
Company, L.P., a Delaware limited partnership ('Warburg')). A copy of Goldman
Sachs' opinion is included as Annex III to the accompanying Proxy Statement. You
are urged to read the opinion in its entirety for further information with
respect to the assumptions made, matters considered and limits of the review
undertaken by Goldman Sachs.
 
     Only holders of record of shares of Panavision Common Stock at the close of
business on April 8, 1998 are entitled to notice of, and to vote at, the
Meeting. A complete list of stockholders entitled to vote at the Meeting will be
available for examination, for proper purposes, during ordinary business hours
at Panavision's corporate offices, 6219 De Soto Avenue, Woodland Hills,
California 91367, and at The Chase Manhattan Bank, 270 Park Avenue, 11th Floor,
Conference Room C, New York, New York, during the 10 days prior to the Meeting.
 
     YOUR VOTE IS VERY IMPORTANT REGARDLESS OF HOW MANY SHARES OF PANAVISION
COMMON STOCK YOU OWN. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, YOU
ARE REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS EXERCISE BY (1) ATTENDING AND VOTING IN PERSON AT THE MEETING OR (2)
DELIVERING TO THE SECRETARY OF PANAVISION (A) A WRITTEN NOTICE OF REVOCATION OR
(B) A DULY EXECUTED PROXY RELATING TO THE SAME SHARES AND MATTERS TO BE
CONSIDERED AT THE MEETING, BEARING A DATE LATER THAN THE PROXY PREVIOUSLY
EXECUTED.

<PAGE>

     STOCKHOLDERS MAKING AN ELECTION SHOULD RETURN THE ENCLOSED FORM OF ELECTION
(TOGETHER, ONLY IN THE CASE OF NON-CASH ELECTION SHARES, WITH DULY ENDORSED
PANAVISION STOCK CERTIFICATES) AS INSTRUCTED IN THE PROXY STATEMENT. SEE 'THE
MERGER--ELECTION.' SHARES HELD BY STOCKHOLDERS WHO FAIL TO MAKE AN ELECTION WILL
BE DEEMED CASH ELECTION SHARES. STOCKHOLDERS ELECTING TO RECEIVE CASH OR WHO DO
NOT MAKE AN ELECTION SHOULD RETAIN THEIR STOCK CERTIFICATES UNTIL LETTERS OF
TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER. SEE 'THE
MERGER--CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF
CERTIFICATES.'
 
                                          By order of the Board of Directors


                                          CHRISTOPHER M.R. PHILLIPS
                                          Secretary
 
May   , 1998
 
 PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
                             POSTAGE-PAID ENVELOPE.
 
                                       2

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.  THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE.  THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE.


                    SUBJECT TO COMPLETION, DATED MAY 4, 1998
                                PANAVISION INC.
                           PROXY STATEMENT/PROSPECTUS
                          COMBINED ANNUAL AND SPECIAL
                            MEETING OF STOCKHOLDERS
                          TO BE HELD ON JUNE    , 1998
 
                            ------------------------
 
     This Proxy Statement/Prospectus (the 'Proxy Statement') is being furnished
to stockholders of Panavision Inc., a Delaware corporation (together with its
subsidiaries, except where the context otherwise requires, 'Panavision' or the
'Company'), in connection with the solicitation of proxies by the Board of
Directors of the Company (the 'Board of Directors' or the 'Board') for use at a
combined Annual and Special Meeting of Stockholders, which will be held at The
Chase Manhattan Bank, 270 Park Avenue, 11th Floor, Conference Room C, New York,
New York, on June   , 1998 at 10:00 a.m. (the 'Meeting').
 
     At the Meeting, the Panavision stockholders will be asked to consider and
vote on a proposal to approve and adopt the Agreement of Recapitalization and
Merger, dated as of December 18, 1997 (the 'Recapitalization Agreement'), by and
among PX Holding Corporation, a Delaware corporation ('PX Holding'), PX Merger
Corporation, a Delaware corporation ('Merger Sub') and wholly owned subsidiary
of PX Holding, and Panavision. The Recapitalization Agreement provides, among
other things, for the merger of Merger Sub with and into Panavision (the
'Merger') pursuant to which each share of Panavision's common stock, $.01 par
value per share ('Panavision Common Stock'), issued and outstanding immediately
prior to the effective time of the Merger (other than shares of Panavision
Common Stock held by Warburg, Pincus Capital Company, L.P., a Delaware limited
partnership ('Warburg')) will be converted, at the election of the holder, which
election must be received by ChaseMellon Shareholder Services, L.L.C. at one of
the addresses listed on the Form of Election by 5:00 p.m., Eastern time, on June
  , 1998, the day preceding the Meeting, into either (a) the right to receive
$27.00 in cash or (b) the right to retain one share of Panavision Common Stock.
Because at least 745,380 of the shares of Panavision Common Stock held by
stockholders other than Warburg (each such stockholder, a 'Holder'),
representing 12% of such Holders' shares, must be retained by the Holders either
through election or proration, the right to receive $27.00 in cash for each
share of Panavision Common Stock is subject to proration, as set forth in the
Recapitalization Agreement and described in this Proxy Statement. No Holder's
election to retain shares of Panavision Common Stock will be subject to
proration. For a more detailed description of the proration procedures, see 'THE

MERGER--Merger Consideration.'
 
     Pursuant to an Amended and Restated Voting and Stockholders Agreement,
dated as of April 16, 1998 (the 'Stockholders Agreement' and together with the
Recapitalization Agreement, and the transactions contemplated thereby, the
'Panavision Recapitalization'), by and among Warburg, Mafco Holdings Inc., a
Delaware corporation ('Mafco'), and Panavision, Warburg has agreed to exchange
11,190,960, shares of Panavision Common Stock, representing 88% of the
Panavision Common Stock that it owns, for Series A redeemable preferred stock in
the Company (the 'Redeemable Preferred Stock'), that shall be redeemed
immediately upon consummation of the Merger at a price equivalent to $26.50 per
share of Panavision Common Stock. To the extent fewer than 88% of the Holders'
shares of Panavision Common Stock are exchanged for cash, Warburg will increase
the number of shares of Panavision Common Stock it exchanges for Redeemable
Preferred Stock (or will sell such shares to PX Holding), up to the remainder of
its shares of Panavision Common Stock. Copies of
 
                                                  (Cover continued on next page)
 
     SEE 'RISK FACTORS' BEGINNING ON PAGE 22 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS OF PANAVISION COMMON STOCK IN
CONNECTION WITH THEIR CONSIDERATION OF THE MERGER AND WHETHER TO ELECT CASH FOR
THEIR SHARES OF PANAVISION COMMON STOCK OR TO RETAIN SUCH SHARES.
 
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
      EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
          UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY
            REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
               The date of this Proxy Statement is May   , 1998.

<PAGE>

(Continued from previous page)
 
the Recapitalization Agreement and the Stockholders Agreement are attached as
Annex I and Annex II, respectively, hereto and are incorporated herein by
reference.
 
     As a result of the Recapitalization Agreement and the Stockholders
Agreement, PX Holding, a wholly owned subsidiary of Mafco, the sole stockholder
of which is Ronald O. Perelman, will acquire control of the Company. Assuming
Holders of at least 88% of the shares of Panavision Common Stock elect to
receive cash for their shares, PX Holding will own approximately 72% of the
issued and outstanding Panavision Common Stock, Warburg will own approximately
19% of the issued and outstanding Panavision Common Stock and the Holders will
own approximately 9% of the issued and outstanding Panavision Common Stock. In
the event that all Holders, other than the Company's directors, officers, key
employees and a trust established by an officer of the Company, elect to retain
their shares of Panavision Common Stock, PX Holding will own approximately 59.1%
of the issued and outstanding Panavision Common Stock, the Holders will own
approximately 40.9% of the issued and outstanding Panavision Common Stock and
Warburg, after selling 1,741,283 shares of Panavision Common Stock to PX Holding

and after exchanging the remainder of its shares of Panavision Common Stock for
Redeemable Preferred Stock pursuant to the Stockholders Agreement, will not own
any of the issued and outstanding Panavision Common Stock (the 'Significant
Share Retention Alternative'). None of the Company's directors, officers and key
employees and a trust established by an officer of the Company, who hold in the
aggregate 2,199,100 shares of Panavision Common Stock (except that an officer of
the Company has indicated that he may transfer 120,000 of such shares to a
charitable organization), intend to elect to retain any of such shares.
 
     In connection with the Panavision Recapitalization, the Company expects to
(i) enter into a credit agreement with a maximum commitment amount of $340
million, (ii) receive approximately $144 million, already raised in a
transaction exempt from registration under the Securities Act of 1933, as
amended (the 'Securities Act'), pursuant to Rule 144A and Regulation S
thereunder, and assume obligations under notes issued in connection therewith
and (iii) receive an equity contribution from PX Holding of approximately $154
million (collectively, the 'Recapitalization Financings'). It is currently
anticipated that the Recapitalization Financings will be used to (i) fund the
payment of the cash consideration in the Merger, (ii) repay or repurchase
certain indebtedness of the Company, (iii) make cash payments for unexercised
stock options, (iv) pay the fees and expenses in connection with the Merger and
the Recapitalization Financings and (v) fund working capital requirements. As a
result of the Panavision Recapitalization, the Company on a pro forma basis will
have a substantial stockholders' deficit of approximately $220 million and a
ratio of debt to total capitalization of 1:6.
 
     In addition to the foregoing matter, at the Meeting, the Panavision
stockholders will be asked to consider and vote on proposals to (i) elect eight
members of the Company's Board of Directors to serve until the Company's next
annual meeting and until such directors' successors are duly elected and shall
have qualified, (ii) ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 1998 and (iii) transact such other business as may
properly come before the Meeting or any adjournment thereof.
 
     This Proxy Statement also constitutes a prospectus of the Company with
respect to the at least 12% of the issued and outstanding shares of panavision
Common Stock to be retained by stockholders in the Merger.
 
     Under the Delaware General Corporation Law (the 'DGCL'), a majority of the
shares of Panavision Common Stock entitled to vote, present in person or
represented by proxy, shall constitute a quorum at the Meeting. The affirmative
vote of the holders of a majority of the Panavision Common Stock outstanding on
April 8, 1998 (the 'Record Date') will be required in order to approve and adopt
the Recapitalization Agreement, the affirmative vote of the holders of a
plurality of Panavision Common Stock present in person or represented by proxy
at the Meeting will be required to elect each of the nominees for election to
the Company's Board of Directors and the affirmative vote of the holders of a
majority of Panavision Common Stock present in person or represented by proxy at
the Meeting will be required to ratify the selection of Ernst & Young LLP as the
Company's independent auditors and other matters as may properly be presented to
holders of Panavision Common Stock at the Meeting. As of the date hereof,
Warburg is the beneficial owner, and has the power to vote and dispose, of
12,717,000 shares of Panavision Common Stock, representing approximately 67.2%
of the issued and outstanding Panavision Common Stock. PURSUANT TO THE

STOCKHOLDERS AGREEMENT, WARBURG HAS AGREED, AMONG OTHER THINGS, TO VOTE ITS
SHARES IN FAVOR OF THE ADOPTION OF THE RECAPITALIZATION AGREEMENT. ACCORDINGLY,
APPROVAL OF THE RECAPITALIZATION AGREEMENT IS ASSURED REGARDLESS OF THE VOTE OF
ANY OTHER STOCKHOLDER OF THE COMPANY.
 
                                       2

<PAGE>

(Continued from previous page)
 
     THE BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, UNANIMOUSLY APPROVED
THE RECAPITALIZATION AGREEMENT, AND DETERMINED THAT THE RECAPITALIZATION
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST
INTERESTS OF, PANAVISION AND THE STOCKHOLDERS, AND RECOMMENDS THAT YOU VOTE FOR
APPROVAL AND ADOPTION OF THE RECAPITALIZATION AGREEMENT. In reaching its
determination, the Board of Directors considered, among other things, the
opinion of Goldman, Sachs & Co. ('Goldman Sachs'), as to the fairness, from a
financial point of view, of the consideration to be received by the Holders of
Panavision Common Stock in the Merger. A copy of Goldman Sachs' opinion is
included as Annex III to this Proxy Statement. YOU ARE URGED TO READ THE OPINION
IN ITS ENTIRETY FOR FURTHER INFORMATION WITH RESPECT TO THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS OF THE REVIEW UNDERTAKEN BY GOLDMAN SACHS.
 
     Panavision Common Stock is listed for trading on The New York Stock
Exchange, Inc. ('NYSE') under the symbol 'PVI.' On December 17, 1997, the last
trading day before public announcement of the execution of the Recapitalization
Agreement, the reported high and low price of Panavision Common Stock on the
NYSE Composite Transactions Tape was $28 1/4 per share and $27 1/8 per share,
respectively. On May 1, 1998, the most recent practicable date prior to the
printing of this Proxy Statement, the reported high and low price of Panavision
Common Stock on the NYSE Composite Transactions Tape was $26 1/4 per share and
$26 1/4 per share, respectively. If the Recapitalization Agreement is approved,
there will be a substantial decrease in the number of outstanding shares of
Panavision Common Stock, and the volume of shares of Panavision Common Stock
traded following the Merger will likely be substantially smaller than the
trading volume of Panavision Common Stock prior to the Merger. However, the
Merger is not expected to cause the Panavision Common Stock to be delisted from
the NYSE. See 'RISK FACTORS--Loss of Liquidity.'
 
     This Proxy Statement, the accompanying form of proxy (the 'Proxy') and the
other enclosed documents are first being mailed to stockholders on or about May
  , 1998.
 
                                       3

<PAGE>

                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
AVAILABLE INFORMATION......................................................................................      6
FORWARD LOOKING STATEMENTS.................................................................................      6
SUMMARY....................................................................................................      7
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............................................................     19
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA................................................................     20
PRICE OF PANAVISION COMMON STOCK...........................................................................     21
RISK FACTORS...............................................................................................     22
THE COMPANY................................................................................................     26
THE MEETING................................................................................................     26
  Matters to Be Considered.................................................................................     26
  Required Votes...........................................................................................     27
  Voting and Revocation of Proxies.........................................................................     28
  Record Date; Stock Entitled to Vote; Quorum..............................................................     28
  Dissenting Stockholder Rights............................................................................     29
  Solicitation of Proxies..................................................................................     29
  Procedure for Election of Consideration in the Merger....................................................     29
  Availability of Independent Accountants..................................................................     29
THE MERGER.................................................................................................     30
  Background of the Merger.................................................................................     30
  Recommendation of the Board of Directors; Reasons for the Merger.........................................     31
  Opinion of Goldman Sachs.................................................................................     34
  Certain Estimates of Future Operations and Other Information.............................................     37
  Merger Consideration.....................................................................................     38
  Election of Cash or Panavision Common Stock..............................................................     39
  Possible Effects on Proration............................................................................     39
  Election Procedure.......................................................................................     40
  Merger Sub Common Stock and PX Holding Stock Purchase....................................................     40
  Effective Time of the Merger.............................................................................     41
  Conversion/Retention of Shares; Procedures for Exchange of Certificates..................................     41
  Conduct of Business Pending the Merger...................................................................     42
  Conditions to the Consummation of the Merger.............................................................     42
  Certain Federal Income Tax Consequences..................................................................     42
  Accounting Treatment.....................................................................................     43
  Effect on Stock Options and Employee Benefit Matters.....................................................     43
  Interests of Certain Persons in the Merger...............................................................     44
  Resale of Panavision Common Stock Following the Merger...................................................     44
  Recapitalization Financings..............................................................................     44
  The Solvency Opinion.....................................................................................     47
UNAUDITED PRO FORMA FINANCIAL DATA.........................................................................     49
CERTAIN PROVISIONS OF THE RECAPITALIZATION AGREEMENT.......................................................     54
  The Merger...............................................................................................     54
  Certificate of Incorporation and By-Laws.................................................................     54
  Board of Directors and Officers of the Company Following the Merger......................................     54
  Representations and Warranties...........................................................................     55
  Conduct of Business Pending the Merger...................................................................     56

  Access to Information....................................................................................     56
  Stock Purchase...........................................................................................     56
  Efforts..................................................................................................     57
  Public Announcements.....................................................................................     57
  Indemnification; Directors' and Officers' Insurance......................................................     57
  No Solicitation..........................................................................................     57
</TABLE>
 
                                       4

<PAGE>

<TABLE>
<S>                                                                                                           <C>
  Redeemable Preferred Stock...............................................................................     58
  Affiliate Letters........................................................................................     58
  Reports..................................................................................................     58
  Stockholder Meeting......................................................................................     58
  Employee Benefit Arrangements............................................................................     59
  Conditions to the Consummation of the Merger.............................................................     59
  Termination; Amendments; Waiver..........................................................................     60
  Fees and Expenses........................................................................................     60
CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT WITH WARBURG..............................................     61
  Representations and Warranties...........................................................................     61
  Options..................................................................................................     61
  Third Party Business Combination; Remedy.................................................................     61
  Agreement to Vote; Proxy.................................................................................     62
  No Solicitation..........................................................................................     62
  Restriction on Transfer..................................................................................     62
  Redeemable Preferred Stock...............................................................................     62
  Purchaser Stock Purchase.................................................................................     62
  Tag-Along Rights.........................................................................................     62
  Independent Directors....................................................................................     63
  Termination..............................................................................................     63
  Restrictions on Transfer.................................................................................     63
REGULATORY APPROVALS.......................................................................................     63
MERGER SUB, PX HOLDING AND MAFCO...........................................................................     63
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................................     64
NOMINEES FOR ELECTION AS DIRECTORS OF PANAVISION...........................................................     65
  Nominees for Election as Directors.......................................................................     66
  Board Committees and Meetings............................................................................     67
  Executive Officers.......................................................................................     67
  Executive Compensation...................................................................................     69
  Option Grant Table.......................................................................................     69
  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values........................     69
  Management Contracts and Change in Control Agreements....................................................     70
  Compensation Committee and Stock Option Committee Report on Executive Compensation.......................     70
  Compensation Committee Interlocks and Insider Participation..............................................     71
COMPARATIVE STOCK PERFORMANCE GRAPH........................................................................     71
CERTAIN RELATIONSHIPS AND TRANSACTIONS.....................................................................     72
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.......................................     73
RATIFICATION OF SELECTION OF THE COMPANY'S AUDITORS........................................................     73
LEGAL OPINIONS.............................................................................................     73

EXPERTS....................................................................................................     74
INCORPORATION OF DOCUMENTS BY REFERENCE....................................................................     74
STOCKHOLDER PROPOSALS......................................................................................     74
INDEX OF DEFINED TERMS.....................................................................................      i
FORM OF PROXY
ANNEX I--Agreement of Recapitalization and Merger, By and Among PX Holding Corporation, PX Merger
  Corporation and Panavision Inc., dated as of December 18, 1997
ANNEX II--Amended and Restated Voting and Stockholders Agreement, By and Among Warburg, Pincus Capital
  Company, L.P., Panavision Inc. and Mafco Holdings Inc., dated as of April 16, 1998
ANNEX III--Opinion of Goldman, Sachs & Co., dated as of December 18, 1997
</TABLE>
 
                                       5

<PAGE>

     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT IN CONNECTION WITH THE MERGER, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES OFFERED BY THIS
PROXY STATEMENT, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM
ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF
AN OFFER, OR PROXY SOLICITATION, IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROXY STATEMENT NOR THE ISSUANCE OR SALE OF ANY SECURITIES HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE INFORMATION SET FORTH HEREIN SINCE THE DATE HEREOF OR INCORPORATED BY
REFERENCE HEREIN SINCE THE DATE HEREOF.
 
                             AVAILABLE INFORMATION
 
     Panavision is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the 'Commission'). Such reports, proxy
statements and other information filed may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the web site
(http://www.sec.gov) maintained by the Commission, or at its regional offices
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The Panavision Common Stock is listed on the New York Stock Exchange, and
reports and other information concerning Panavision can be inspected at the
offices of The New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
 
     This Proxy Statement does not contain all the information set forth in the
Registration Statement on Form S-4 and exhibits relating thereto, including any
amendments (the 'Registration Statement'), of which this Proxy Statement is a
part, and which Panavision has filed with the Commission under the Securities
Act of 1933, as amended (the 'Securities Act'). Reference is made to the
Registration Statement and related exhibits for further information with respect
to Panavision and the Panavision Common Stock offered hereby. Statements
contained herein concerning the provisions of documents are necessarily
summaries of such documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission or
attached as an annex hereto.
 
                           FORWARD LOOKING STATEMENTS
 
     This Proxy Statement includes 'forward-looking statements' within the
meaning of various provisions of the Securities Act and the Exchange Act,
including, without limitation, statements under 'THE MERGER--Background of the
Merger' and '--Certain Estimates of Future Operations and Other Information.'
All statements, other than statements of historical facts, included in this

Proxy Statement that address activities, events or developments that the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of the Company's business and operations, plans, references
to future success and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results and
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, including the risk factors
discussed in this Proxy Statement and other factors, many of which are beyond
the control of the Company. See 'RISK FACTORS.'
 
                                       6

<PAGE>

                                    SUMMARY
 
     The following summary is intended only to highlight certain information
contained elsewhere in this Proxy Statement and the Annexes hereto. This summary
is not intended to be complete and is qualified in its entirety by the more
detailed information contained elsewhere or incorporated by reference in this
Proxy Statement. Panavision stockholders should read carefully this Proxy
Statement in its entirety. Certain capitalized terms used in this summary are
defined elsewhere in this Proxy Statement.
 
                                  THE MEETING
 
  Time And Place; Record Date
 
     The Meeting will be held at The Chase Manhattan Bank, 270 Park Avenue, 11th
Floor, Conference Room C, New York, New York on June   , 1998 at 10:00 a.m.
Stockholders of record at the close of business on the Record Date will be
entitled to notice of, and to vote at, the Meeting. This Proxy Statement, the
Proxy and the other enclosed documents are first being mailed to the
stockholders on or about May   , 1998. At the close of business on April 8,
1998, there were 18,928,500 shares of Panavision Common Stock outstanding and
entitled to vote.
 
  Matters To Be Considered
 
     At the Meeting, the Panavision stockholders will consider and vote on (i) a
proposal to approve and adopt the Recapitalization Agreement, including the
Merger, pursuant to which (a) Merger Sub will merge with and into the Company,
(b) the Panavision stockholders will receive the consideration described below
in this Summary under '--The Merger--Effect of the Merger' and (c) PX Holding, a
wholly owned subsidiary of Mafco, the sole stockholder of which is Ronald O.
Perelman, will purchase 5,784,199 newly issued shares of Panavision Common Stock
from the Company (or 4,067,467 shares of newly issued Panavision Common Stock
from the Company and 1,741,283 shares of Panavision Common Stock from Warburg
under the Significant Share Retention Alternative), see 'THE MERGER--Merger

Consideration,' (ii) the election of eight directors to Panavision's Board of
Directors, (iii) the ratification of the selection of Ernst & Young LLP as the
Company's independent auditors for 1998, and (iv) such other business as may
properly come before the Meeting and any adjournment or postponement thereof.
 
  Required Votes
 
     Under the DGCL, a majority of the shares of Panavision Common Stock
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at the Meeting. The affirmative vote of the holders of a majority of the
Panavision Common Stock outstanding on the Record Date will be required in order
to approve and adopt the Recapitalization Agreement, the affirmative vote of the
holders of a plurality of Panavision Common Stock present in person or
represented by proxy at the Meeting will be required to elect each of the
nominees for election to the Company's Board of Directors; and the affirmative
vote of the holders of a majority of Panavision Common Stock present in person
or represented by proxy at the Meeting will be required to ratify the selection
of Ernst & Young LLP as the Company's independent auditors and approve or adopt
other matters as may properly be presented to holders of Panavision Common Stock
at the Meeting. If such approval of these matters is received, the effective
time of the Merger (the 'Effective Time') is expected to occur immediately
following the Meeting.
 
     PURSUANT TO THE STOCKHOLDERS AGREEMENT, WARBURG HAS AGREED, AMONG OTHER
THINGS, TO VOTE ITS SHARES IN FAVOR OF THE ADOPTION OF THE RECAPITALIZATION
AGREEMENT. ACCORDINGLY, APPROVAL OF THE RECAPITALIZATION AGREEMENT IS ASSURED
REGARDLESS OF THE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY.
 
                                       7

<PAGE>

  Voting of Proxies
 
     All shares of Panavision Common Stock represented by a properly executed
Proxy received in time for the Meeting will be voted in the manner specified in
the Proxy. Proxies that do not contain any instruction to vote for or against or
to abstain from voting on a particular matter will be voted in accordance with
the recommendation of the Board of Directors. See 'THE MEETING--Voting and
Revocation of Proxies.'
 
     It is not expected that any matter other than those referred to herein will
be brought before the stockholders at the Meeting. If, however, other matters
are properly presented, the persons named as proxies will vote in accordance
with their best judgment with respect to such matters, unless authority to do so
is withheld in the Proxy.
 
  Revocability of Proxies
 
     You may revoke your Proxy at any time prior to its exercise (i) by
attending the Meeting and voting in person (although attendance at the Meeting
will not in and of itself constitute revocation of a Proxy), (ii) by giving
notice of revocation of your Proxy at the Meeting or (iii) by delivering (a) a
written notice of revocation of your Proxy or (b) a duly executed Proxy relating

to the matters to be considered at the Meeting, bearing a date later than the
Proxy previously executed, to the Secretary of Panavision, Inc., 6219 De Soto
Avenue, Woodland Hills, California 91367. Unless revoked in one of the manners
set forth above, Proxies in the form enclosed will be voted at the Meeting in
accordance with your instructions.
 
  Solicitation of Proxies
 
     The cost of soliciting Proxies will be borne by the Company. The Company
may solicit Proxies and the Company's directors, officers and employees may also
solicit Proxies by telephone, telegram or personal interview. Such directors,
officers and employees will not be additionally compensated for any such
solicitation but may be reimbursed for reasonable out-of-pocket expenses in
connection therewith. Arrangements will be made to furnish copies of Proxy
materials to fiduciaries, custodians and brokerage houses for forwarding to
beneficial owners of Panavision Common Stock. Such persons will be paid
reasonable out-of-pocket expenses.
 
     HOLDERS OF PANAVISION COMMON STOCK SHOULD NOT SEND STOCK CERTIFICATES WITH
THEIR PROXY CARDS. STOCKHOLDERS MAKING AN ELECTION SHOULD RETURN THE ENCLOSED
FORM OF ELECTION (TOGETHER, ONLY IN THE CASE OF NON-CASH ELECTION SHARES, WITH
DULY ENDORSED PANAVISION STOCK CERTIFICATES) AS INSTRUCTED IN THE PROXY
STATEMENT. SEE 'THE MERGER--ELECTION.' SHARES HELD BY STOCKHOLDERS WHO FAIL TO
MAKE AN ELECTION WILL BE DEEMED CASH ELECTION SHARES. STOCKHOLDERS ELECTING TO
RECEIVE CASH OR WHO DO NOT MAKE AN ELECTION SHOULD RETAIN THEIR STOCK
CERTIFICATES UNTIL LETTERS OF TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME
OF THE MERGER. SEE 'THE MERGER--CONVERSION/RETENTION OF SHARES; PROCEDURES FOR
EXCHANGE OF CERTIFICATES.'
 
  Security Ownership of Management
 
     As of May 1, 1998, directors and executive officers of the Company were
beneficial owners of an aggregate of 14,978,539 shares of Panavision Common
Stock (approximately 79.1% of Panavision Common Stock). The directors and
executive officers of the Company have indicated that they intend to vote their
shares of Panavision Common Stock in favor of the Recapitalization Agreement,
the nominees for election to the Board of Directors and the ratification of
Ernst & Young LLP as the Company's independent auditors. See 'SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.'
 
                                       8

<PAGE>

                                   THE MERGER
 
  Effect of the Merger
 
     At the Effective Time, Merger Sub will be merged with and into Panavision,
and Panavision will continue as the surviving corporation in the Merger.
 
     Pursuant to the Merger, each share of the Holders of Panavision Common
Stock issued and outstanding immediately prior to the Effective Time will be
converted, at the election of the Holder thereof and subject to the terms

described herein, into either (a) the right to receive $27.00 in cash or (b) the
right to retain one fully paid and nonassessable share of Panavision Common
Stock. Because at least 745,380 shares of Panavision Common Stock, representing
at least 12% of the Holders' shares of Panavision Common Stock, must be retained
by the Holders, the right to receive $27.00 in cash, per share is subject to
proration, as set forth in the Recapitalization Agreement and described herein.
No Holder's election to retain shares of Panavision Common Stock will be subject
to proration. For a more detailed description of the proration procedures, see
'THE MERGER--Merger Consideration.'
 
     Warburg has agreed, pursuant to the Stockholders Agreement, to exchange
11,190,960 shares of Panavision Common Stock, representing 88% of its shares of
Panavision Common Stock for Redeemable Preferred Stock, that shall be redeemed
immediately upon consummation of the Merger at a price equivalent to $26.50 per
share of Panavision Common Stock. To the extent fewer than 88% of the Holders'
shares of Panavision Common Stock are exchanged for cash, Warburg will increase
the number of shares of Panavision Common Stock it exchanges for Redeemable
Preferred Stock (or will sell such shares to PX Holding), up to the remainder of
its shares of Panavision Common Stock. A copy of the Recapitalization Agreement
is attached as Annex I to this Proxy Statement and is incorporated herein by
reference. This Proxy Statement describes the material portions of the
Recapitalization Agreement. The description of the Recapitalization Agreement
set forth herein is subject to, and is qualified in its entirety by reference
to, the text of the Recapitalization Agreement. A copy of the Stockholders
Agreement is included as Annex II to this Proxy Statement and is incorporated
herein by reference. This Proxy Statement describes the material portions of the
Stockholders Agreement. The description of the Stockholders Agreement set forth
herein is subject to, and is qualified in its entirety by reference to, the text
of the Stockholders Agreement.
 
     Approval and adoption of the Recapitalization Agreement requires the
affirmative vote of a majority of the outstanding shares of Panavision Common
Stock held by stockholders of record on April 8, 1998. As of this date, Warburg
is the beneficial owner, and has the power to vote and dispose, of approximately
67.2% of Panavision Common Stock. PURSUANT TO THE STOCKHOLDERS AGREEMENT,
WARBURG HAS AGREED, AMONG OTHER THINGS, TO VOTE ITS SHARES IN FAVOR OF THE
ADOPTION OF THE RECAPITALIZATION AGREEMENT. ACCORDINGLY, APPROVAL OF THE
RECAPITALIZATION AGREEMENT IS ASSURED REGARDLESS OF THE VOTE OF ANY OTHER
STOCKHOLDER OF THE COMPANY.
 
     The Panavision Recapitalization will be accounted for as a recapitalization
as there will be a significant continuation of stockholder ownership.
Accordingly, the transaction will have no impact on the historical basis of the
Company's assets and liabilities.
 
  Recommendation of the Board of Directors
 
     The Board of Directors, after careful consideration, has unanimously
approved the Recapitalization Agreement and has determined that the Merger is
fair to, and in the best interests of, the Company and its stockholders and
recommends that holders of Panavision Common Stock vote FOR approval and
adoption of the Recapitalization Agreement. In the course of reaching its
decision to approve the Recapitalization Agreement and the Merger, the Board of
Directors consulted with the Company's legal and financial advisors and

considered a number of factors including, but not limited to: (i) the fact that
Warburg holds approximately 67.2% of the outstanding shares of Common Stock and
had indicated to the Board it believed that the Recapitalization Agreement and
the consideration to be received in the Merger were fair to, and in the best
interests of the Company and its stockholders and agreed to accept $0.50 per
share less than the consideration to be received by the Holders who elect to
receive Cash Election Shares or make no election; (ii) the terms and conditions
of the Recapitalization Agreement, including, but not limited to, the amount and
form of consideration; (iii) the opinion of Goldman Sachs that the Aggregate
Consideration (as defined herein) to be received by the Holders pursuant to the
Recapitalization Agreement was fair to the Holders, from a financial point of
view; (iv) the ability of the
 
                                       9

<PAGE>

Board of Directors and Warburg to respond to unsolicited inquiries and proposals
from third parties interested in the possible acquisition of the Company and to
terminate the Recapitalization Agreement for a superior proposal without payment
by the Company of a break-up fee; (v) the fact that the Holders of the Company
will have the right to elect to receive cash, subject to proration, or to retain
Panavision Common Stock; (vi) the fact that given the historical stock trading
analysis and the premium associated with each of the high, low and weighted
average traded market prices of Panavision Common Stock, the cash consideration
was fair to the stockholders of the Company; (vii) the fact that stockholders
may be required to retain shares of Panavision Common Stock as a result of
proration; and (viii) the fact that executive officers and other employees of
the Company have received or will receive certain benefits not available to the
Company's other stockholders. The Board of Directors believed that those factors
supporting its determination to approve the Recapitalization Agreement
substantially outweighed any factors weighing against its decision to approve
the Recapitalization Agreement. See 'THE MERGER--Background of the Merger' and
'--Recommendation of the Board of Directors; Reasons for the Merger.'
 
  Opinion of Goldman, Sachs & Co.
 
     On December 17, 1997, Goldman Sachs delivered to the Board of Directors of
the Company its oral opinion that, as of such date, the Aggregate Consideration
(as defined below) to be received by the Holders pursuant to the
Recapitalization Agreement was fair, from a financial point of view, to such
Holders. Goldman Sachs subsequently confirmed its earlier opinion by delivery of
its written opinion dated as of December 18, 1997. For purposes of its opinion,
Goldman Sachs assumed that the Holders will receive $27.00 per share in cash for
approximately 88% of their Panavision Common Stock and retain the balance of
such Panavision Common Stock (the 'Aggregate Consideration').
 
     The full text of the written opinion of Goldman Sachs, which sets forth
assumptions made, matters considered and limitations on the review undertaken by
them in connection with such opinion, is attached hereto as Annex III and is
incorporated herein by reference. The opinion of Goldman Sachs referred to
herein does not constitute a recommendation as to how any Holder should vote
with respect to the Recapitalization Agreement or what election any Holder
should make in connection with the Merger. HOLDERS ARE URGED TO, AND SHOULD,

READ SUCH OPINION IN ITS ENTIRETY. SEE 'THE MERGER--Opinion of Goldman Sachs.'
 
  Election; Proration
 
     Record Holders of shares of Panavision Common Stock will be entitled to
make an unconditional election (an 'Election') on or prior to the Election Date
(as defined below) to retain fully paid and nonassessable shares of Panavision
Common Stock ('Non-Cash Election Shares') or to receive an amount in cash equal
to $27.00 per share ('Cash Election Shares'). Shares held by Holders who fail to
make an Election will be deemed Cash Election Shares. If the number of Cash
Election Shares is greater than the number of shares of Panavision Common Stock
to be converted into the right to receive cash (the 'Cash Election Number'),
then each Holder of a Cash Election Share shall receive $27.00 in cash or shall
retain such share of Panavision Common Stock in the following manner: (i) a
Proration Factor (as defined below) shall be determined by dividing the Cash
Election Number by the total number of Cash Election Shares; (ii) the number of
Cash Election Shares converted into cash shall be determined by multiplying the
Proration Factor by the total number of Cash Election Shares covered by such
election, rounded down to the nearest whole number; and (iii) all Cash Election
Shares, other than those shares that shall receive cash under (ii) above, shall
be deemed to be Non-Cash Election Shares (on a consistent basis among Cash
Election Shares).
 
  Election Procedures
 
     Holders of Panavision Common Stock making an Election must properly
complete and sign the election form (the 'Form of Election') accompanying this
Proxy Statement, and such Form of Election (together, only in the case of
Holders of Non-Cash Election Shares, with all certificates representing shares
of Panavision Common Stock duly endorsed in blank or otherwise in form
acceptable for transfer on the books of the Company (or by appropriate guarantee
of delivery, as set forth in such Form of Election)), must be received by
ChaseMellon Shareholder Services, L.L.C. (the 'Exchange Agent') at one of the
addresses listed on the Form of Election by 5:00 p.m., Eastern time, on June   ,
1998, the day preceding the Meeting (the 'Election Date') and must not be
 
                                       10

<PAGE>

withdrawn. Shares held by Holders who fail to make an Election will be deemed
Cash Election Shares. See 'THE MERGER--Election Procedure.'
 
  No Solicitation
 
     Pursuant to the Recapitalization Agreement, the Company and its affiliates
will not, and will instruct their respective officers, directors, employees,
agents or other representatives not to: (i) solicit, initiate or encourage or
take any other action to facilitate, any inquiries or to make any proposal which
constitutes a Transaction Proposal (as defined herein) or may reasonably be
expected to lead to a proposal for a Transaction Proposal; or (ii) enter into or
participate in any discussions or negotiations regarding a Transaction Proposal.
The foregoing provision will not prohibit the Company from (a) furnishing
information to any person pursuant to a confidentiality agreement on terms no

less favorable to the Company than the Confidentiality Agreement (as defined
herein) or engaging in discussions or negotiations with a person that makes a
Transaction Proposal, provided, that prior to taking such action, the Board
determines that such proposal is a Superior Proposal (as defined herein) and the
Board notifies PX Holding of its intentions, (b) failing to make or withdrawing
or modifying its recommendation to the Company's stockholders that they approve
the Merger, if after consultation with and based upon the advice of independent
legal counsel, the Board determines in good faith that such action is necessary
for the Board to comply with its fiduciary duties, or (c) disclosing to the
Company's stockholders a position contemplated by certain Exchange Act rules
with respect to any tender offer, or taking any other legally required action.
See 'CERTAIN PROVISIONS OF THE RECAPITALIZATION AGREEMENT--No Solicitation.'
 
  Conditions to the Merger
 
     The obligations of Panavision, PX Holding and Merger Sub to consummate the
Merger are subject to various conditions, including, without limitation, (i) the
Company and PX Holding each having received a solvency letter as to the solvency
of the Company and its subsidiaries on a consolidated basis after giving effect
to the transactions contemplated by the Recapitalization Agreement, (ii)
obtaining requisite Panavision stockholder approval, (iii) the termination or
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended (the 'HSR Act'), and (iv) the absence of any
injunction or other legal restraint or prohibition preventing the consummation
of the Merger. In addition, the obligations of PX Holding and Merger Sub to
consummate the Merger is subject to the absence of any change in or effect on
the business, financial condition or results of operations of the Company and
its subsidiaries that would be materially adverse to the Company and its
subsidiaries taken as a whole.
 
  Regulatory Approvals
 
     Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the 'FTC'), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and to the
Antitrust Division of the Department of Justice (the 'Antitrust Division') and
the applicable waiting period has expired or been terminated. On February 4,
1998, Warburg and Ronald O. Perelman filed Notification and Report Forms under
the HSR Act with the FTC and the Antitrust Division. On February 13, 1998,
Warburg and Mr. Perelman received notice that the requisite waiting period under
the HSR Act was terminated. See 'REGULATORY APPROVALS.'
 
  Certain Federal Income Tax Consequences
 
     The receipt of cash by a stockholder in exchange for Panavision Common
Stock pursuant to the Merger will be a taxable transaction for federal income
tax purposes and may be a taxable transaction for state and local purposes as
well. A stockholder will recognize gain or loss measured by the difference
between the cash received in exchange for such stockholder's shares of
Panavision Common Stock pursuant to the Merger and the adjusted tax basis of
such shares. Such gain or loss will generally be capital gain or loss, and will
be long-term capital gain or loss if the stockholder has held such stock for
more than one year. See 'THE MERGER--Certain Federal Income Tax Consequences.'
 

                                       11

<PAGE>

  Treatment of Company Stock Options
 
     Each stock option held by an employee, consultant or director of the
Company to acquire shares of Panavision Common Stock ('Company Stock Option')
that is outstanding immediately prior to the Merger, whether or not vested or
exercisable, shall, simultaneously with the Merger, be canceled in exchange for
a prompt payment of a single lump sum cash payment equal to the product of (i)
the number of shares of Panavision Common Stock subject to such Company Stock
Option and (ii) the excess, if any, of $27.00 over the exercise price per share
of such Company Stock Option. See 'MERGER--Effect on Stock Options and Employee
Benefit Matters.'
 
  Interests of Certain Persons in the Merger
 
     Certain directors and executive officers of the Company may have interests,
described herein, that present them with potential conflicts of interest in
connection with the Merger. The Board of Directors is aware of the conflicts
described below and considered them in addition to the other matters described
under 'THE MERGER--Recommendation of the Board of Directors; Reasons for the
Merger' and '--Interests of Certain Persons in the Merger.'
 
     Pursuant to the provisions of the Recapitalization Agreement, each holder
of a Company Stock Option, including the executive officers and directors named
under 'Executive Compensation,' shall be entitled to receive the Cash Price less
the exercise price applicable to each Company Stock Option. Accordingly, the
following individuals will receive cash payments in respect of their Company
Stock Options: William C. Scott, $9,453,036; John S. Farrand, $7,909,613;
Jeffrey J. Marcketta, $3,075,915; and Christopher M.R. Phillips, $731,779; and
all directors and all employees (including the officers named above) as a group
(a total of 36 individuals), $29,263,593.
 
     In December 1997, in order to facilitate the payment of taxes related to
the exercise of options issued pursuant to the Panavision Stock Option Plan, the
Company made advances to certain officers and key employees in the form of
notes. Notes were issued by Messrs. Scott, Farrand and Marcketta in the amount
of $2,152,503, $3,698,800 and $924,700, respectively. The notes are recourse
obligations and mature on the earlier of December 24, 2000 or the date of
consummation of the Panavision Recapitalization. Interest on the notes is
compounded semiannually at the applicable federal rate in effect on the date the
notes were issued.
 
     Pursuant to the Recapitalization Agreement, the Company has agreed for six
years after the Effective Time to indemnify all present directors and officers
of the Company and its subsidiaries and will, subject to certain limitations,
maintain for four years a directors' and officers' insurance and indemnification
policy containing terms and conditions which are not less advantageous than any
policy which may be in effect prior to the Effective Time. See 'CERTAIN
PROVISIONS OF THE RECAPITALIZATION AGREEMENT--Indemnification; Directors' and
Officers' Insurance.'
 

     Pursuant to the Stockholders Agreement, Warburg has granted Mafco the
option to purchase the remaining Warburg Shares from Warburg at $30.00 per share
and Mafco has granted Warburg the option (the 'Warburg Option') to sell such
Warburg Shares to Mafco at $25.00 per share. These options are exercisable
during the Option Period (as defined herein). In addition, if the
Recapitalization Agreement is terminated in accordance with the Transaction
Proposal Termination Provision (as defined herein), the Company Board Action
Provision (as defined herein) or the Stockholder Approval Termination Provision
(as defined herein) of the Recapitalization Agreement, or the Recapitalization
Agreement shall have been amended to increase the amount of merger
consideration, and if Warburg receives any consideration in connection with a
Transaction Proposal (as defined herein) or an amended Recapitalization
Agreement, Warburg will pay to Mafco all or a portion thereof. See '--The
Stockholders Agreement with Warburg' and 'CERTAIN PROVISIONS OF THE STOCKHOLDERS
AGREEMENT WITH WARBURG.'
 
     Upon a voluntary termination by Mr. Scott during the six-month period
commencing six months after a change of control, or upon termination of Mr.
Scott's employment by the Company without good cause or by Mr. Scott for good
reason, Mr. Scott is entitled to the greater of (x) $1,600,000 or (y) twice his
annual base salary, and all accrued but previously unpaid salary, bonuses and
unreimbursed expenses through the date of termination. Mr. Scott intends to
terminate such contract prior to the Merger and, accordingly, upon such
termination will not be entitled to any payments thereunder. See 'NOMINEES FOR
ELECTION AS DIRECTORS OF PANAVISION--Management Contracts and Change in Control
Agreements.'
 
                                       12

<PAGE>

  Termination of the Recapitalization Agreement
 
     The Recapitalization Agreement may be terminated at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company: (a) by mutual written consent of PX Holding and the Company, by action
of their respective Boards of Directors; (b) by PX Holding or the Company if the
Merger shall not have been consummated on or before the later of (i) April 30,
1998 and (ii) 45 days after the Commission has declared effective this Proxy
Statement (but in no event later than June 30, 1998) (other than due to the
failure of the party seeking to terminate the Recapitalization Agreement to
perform its obligations under the Recapitalization Agreement); (c) by PX Holding
or the Company if any court of competent jurisdiction or other governmental
entity has issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; (d) by
the Company if, prior to the Closing, any person has made a Transaction
Proposal, provided, that PX Holding receives at least four business days' prior
written notice of such Transaction Proposal, and, during such four-business-day
period, the Company shall, and shall cause its financial and legal advisors to,
consider any adjustment in the terms and conditions of the Recapitalization
Agreement that PX Holding may propose; (e) by PX Holding, if the Board of
Directors of the Company shall have (i) failed to recommend stockholder
approval, (ii) withdrawn or modified in a manner adverse to PX Holding or Merger

Sub its approval or recommendation of the Recapitalization Agreement or the
Merger, (iii) shall have approved or recommended a Transaction Proposal, or (iv)
shall have resolved to effect any of the foregoing; or (f) by PX Holding or the
Company, if Panavision stockholder approval shall not be obtained by reason of
the failure to obtain the required vote upon a vote held at a duly held meeting
of Panavision stockholders or at any adjournment thereof. See 'CERTAIN
PROVISIONS OF THE RECAPITALIZATION AGREEMENT--Termination; Amendment; Waiver'
and '--Fees and Expenses.'
 
                    THE STOCKHOLDERS AGREEMENT WITH WARBURG
 
     Pursuant to the Stockholders Agreement:
 
          o Redeemable Preferred Stock.  Assuming Holders of at least 88% of the
            shares of Panavision Common Stock elect to receive cash for their
            shares, Warburg will exchange 11,190,960 shares of its 12,717,000
            shares of Panavision Common Stock (88% of its holdings) for
            Redeemable Preferred Stock. Such shares of Redeemable Preferred
            Stock will be redeemed at the Effective Time of the Merger at the
            equivalent of $26.50 in cash per share of Panavision Common Stock.
 
          o Additional Redeemable Preferred Stock.  If Holders of fewer than 88%
            of the shares of Panavision Common Stock elect to receive cash for
            their shares, Warburg will exchange additional shares of Panavision
            Common Stock for Redeemeable Preferred Stock, to the extent
            necessary to satisfy any such deficiency.
 
          o Purchaser Stock Purchase.  Under certain circumstances, PX Holding
            will purchase a portion of Warburg's shares of Panavision Common
            Stock at $26.50 per share in lieu of Warburg exchanging such shares
            for Redeemable Preferred Stock.
 
          o Stock Option.  Warburg has granted Mafco an option to purchase at
            $30 per share, and Mafco has granted Warburg an option to sell at
            $25 per share, any shares of Panavision Common Stock held by Warburg
            after consummation of the Merger. Each such option is exercisable
            only between the first and second anniversaries of the Effective
            Time.
 
          o Agreement to Vote; Proxy; No Solicitation.  Warburg will vote its
            shares for the Merger; accordingly, approval of the Merger is
            assured. Moreover, Warburg will not solicit other Acquisition
            Proposals (as defined herein).
 
          o Third Party Business Combination; Remedy.  Warburg will pay to Mafco
            all or a portion of any increased consideration paid to it by Mafco,
            or consideration paid to it by another party, to acquire the
            Company.
 
                                       13

<PAGE>

     Each of the above items is described in more detail below.

 
  Redeemable Preferred Stock
 
     To the extent that Holders of more than 88% of the shares of Panavision
Common Stock elect to receive cash for their shares, immediately prior to the
consummation of the Merger, Warburg will exchange 88% of its shares of
Panavision Common Stock for Redeemable Preferred Stock, which will be redeemed
immediately upon consummation of the Merger at a price equivalent to $26.50 in
cash per share of Panavision Common Stock. The conversion of Warburg's shares
into Redeemable Preferred Stock simply serves as a mechanism to allow Warburg to
receive as consideration in the Merger $.50 per share less than the Holders.
 
     In this circumstance, Warburg will retain 12% of its shares of Panavision
Common Stock subsequent to the Effective Time of the Merger, and, as a result of
proration, all other Holders will in the aggregate also retain 12% of their
shares of Panavision Common Stock subsequent to the Effective Time of the
Merger.
 
  Additional Redeemable Preferred Stock
 
     To the extent that fewer than 88% of the Holders' shares of Panavision
Common Stock are exchanged for cash, Warburg will increase the number of shares
of Panavision Common Stock it exchanges for Redeemable Preferred Stock, to the
extent necessary to satisfy any such deficiency.
 
     In this circumstance, Warburg will retain fewer than 12% of its shares (as
few as none of its shares) of Panavision Common Stock subsequent to the
Effective Time of the Merger. Since other Holders will have affirmatively
elected to retain in the aggregate more than 12% of their shares of Panavision
Common Stock and no Holder's election to retain shares of Panavision Common
Stock will be subject to proration, all other Holders will in the aggregate
retain more than 12% of their shares of Panavision Common Stock subsequent to
the Effective Time of the Merger.
 
  Purchaser Stock Purchase
 
     In connection with the Panavision Recapitalization, PX Holding intends to
purchase a $154 million equity interest in the Company. Pursuant to the
Recapitalization Agreement, if Holders of more than 2,271,420 shares of
Panavision Common Stock elect to retain such shares, PX Holding will not be able
to purchase a $154 million equity interest in the Company. In this circumstance,
Warburg will sell directly to PX Holding at $26.50 per share, in lieu of
exchanging for Redeemable Preferred Stock, a portion of its shares of Panavision
Common Stock.
 
     In the circumstance in which all Holders other than the Company's
directors, officers, key employees and a trust established by an officer of the
Company, elect to retain their shares of Panavision Common Stock (i) PX Holding
will purchase 4,067,467 shares of newly issued shares of Panavision Common Stock
from the Company at $26.58 per share, resulting in a $108 million equity
investment in the Company and (ii) Warburg will sell to PX Holding 1,741,283
shares of Panavision Common Stock at $26.50 per share in lieu of exchanging such
shares for Redeemable Preferred Stock, thereby increasing PX Holding's equity
investment in the Company by $46 million. Accordingly, PX Holding would make its

intended $154 million investment in the Company and Warburg would not retain any
equity interest in the Company. This scenario is described throughout this Proxy
Statement as the 'Significant Share Retention Alternative.'
 
     In this circumstance, Warburg will retain none of its shares of Panavision
Common Stock subsequent to the Effective Time of the Merger, and, because no
Holder's election to retain shares of Panavision Common Stock will be subject to
proration, all other Holders will in the aggregate retain more than 12% of their
shares of Panavision Common Stock subsequent to the Effective Time of the
Merger.
 
  Stock Option
 
     For a period of one year beginning on the first anniversary of the
Effective Time of the Merger and ending on the second anniversary of the
Effective Time of the Merger (the 'Option Period'), Warburg may exercise its
option to require Mafco to purchase Warburg's remaining shares (the 'Warburg
Option Shares') for $25.00 per share (the 'Warburg Option') and Mafco may
exercise its option to require Warburg to sell its remaining shares to Mafco for
$30.00 per share (the 'Mafco Option'). As a result of proration, other Holders
may be required to retain shares of Panavision Common Stock without being party
to a similar option.
 
                                       14

<PAGE>

     In the event that Holders of at least 88% of the shares of Panavision
Common Stock elect to receive cash for their shares, Warburg will exchange 88%
of its shares for Redeemable Preferred Stock and retain its remaining 1,526,040
shares of Panavision Common Stock. All of such remaining shares would be subject
to the Mafco Option and the Warburg Option. Under the Significant Share
Retention Alternative, Warburg will sell all of its shares in the Merger at
$26.50 per share, and, accordingly, no shares would be subject to such options.
 
  Agreement to Vote; Proxy
 
     Warburg has agreed to vote its shares of Panavision Common Stock, among
other things, for the Merger, and also granted to certain officers of Mafco an
irrevocable proxy with respect to such shares. Warburg is the beneficial owner,
and has the power to vote and dispose, of approximately 67.2% of Panavision
Common Stock. Accordingly, approval of the Recapitalization Agreement is assured
regardless of the vote of any other stockholder of the Company.
 
  No Solicitation
 
     Prior to the Termination Date (the earlier of (i) the Effective Time of the
Merger and (ii) the date the Recapitalization Agreement is terminated in
accordance with its terms), Warburg will not, directly or indirectly, solicit or
respond to any inquiries or the making of any proposal of any person or entity
with respect to the Company that constitutes or could reasonably be expected to
lead to an Alternative Transaction (as defined in the Stockholders Agreement);
provided, however, that the foregoing shall not restrict Warburg or any of its
representatives on the Board of Directors from taking actions to the same extent

and in the same circumstances permitted of the Board and the Company under the
Recapitalization Agreement.
 
  Third Party Business Combination; Remedy
 
     If the Recapitalization Agreement is terminated in accordance with the
Transaction Proposal Termination Provision (as defined herein), the Company
Board Action Provision (as defined herein) or the Stockholder Approval
Termination Provision (as defined herein) of the Recapitalization Agreement, or
the Recapitalization Agreement shall have been amended to increase the amount of
merger consideration, and if Warburg receives any consideration in connection
with a Transaction Proposal or an amended Recapitalization Agreement, Warburg
will pay to Mafco all or a portion of such consideration as more fully described
in 'CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT WITH WARBURG--Third Party
Business Combination; Remedy.'
 
  Restriction on Transfer
 
     Prior to the Termination Date, except pursuant to the terms of the
Recapitalization Agreement and the Stockholders Agreement, Warburg will not
transfer or offer to transfer any of its shares of Panavision Common Stock or
grant any proxies with respect to such shares.
 
  Tag-Along Rights
 
     If, at any time on or prior to December 31, 1999, Mafco intends to sell (a
'Sale'), in a single transaction or a series of related transactions, more than
25% of the shares of Panavision Common Stock it beneficially owns other than (i)
to any of its affiliates who agree to be bound by the Stockholders Agreement,
(ii) pursuant to a public offering pursuant to an effective registration
statement under the Securities Act or (iii) pursuant to a merger or similar
acquisition transaction in which all the shares of Panavision Common Stock are
to be acquired, the other stockholders of the Company shall have the right,
subject to the terms and conditions described herein, to participate in such
transaction on the same basis as Mafco. See 'CERTAIN PROVISIONS OF THE
STOCKHOLDERS AGREEMENT WITH WARBURG--Tag-Along Rights.'
 
  Independent Directors
 
     The Stockholders Agreement provides that from and after the Effective Time
of the Merger until the date on which the Company shall no longer have any
public stockholders, Mafco and the Company shall take all action within their
respective power to include on the Board two directors, each of whom is (i)
considered to be an independent director pursuant to the rules contained in the
NYSE Listed Company Manual and (ii) is not an officer or employee of any company
affiliated with Mafco.
 
                                       15

<PAGE>

                     EFFECT OF PANAVISION RECAPITALIZATION
 
<TABLE>

<CAPTION>
                                                                                                 NON-AFFILIATED
                                                PX HOLDING         WARBURG       MANAGEMENT(1)       HOLDERS
                                              ---------------  ---------------  ---------------  ---------------
<S>                                           <C>              <C>              <C>              <C>
PRIOR TO PANAVISION RECAPITALIZATION:
  Shares of Panavision Common Stock owned...  0                12,717,000       2,199,100        4,012,400
ASSUMING ALL HOLDERS ELECT CASH(2):
  Number of shares of Panavision Common
    Stock exchanged for the right to receive
    cash....................................  --               11,190,960(3)    1,935,208        3,530,912
  Cash consideration received for shares of
    Panavision Common Stock exchanged(4)....  --               $296,560,440     $52,250,616      $95,334,624
  Number of Shares of Panavision Common
    Stock retained by existing stockholders
    or acquired by PX Holdings..............  5,784,199        1,526,040        263,892          481,488
  Percentage of shares of Panavision Common
    Stock represented by retained or
    acquired shares.........................  71.8%            18.9%            3.3%             6.0%
  Implied Value of shares of Panavision
    Common Stock retained by existing
    Panavision Stockholders; Purchase Price
    of Shares of Panavision Common Stock
    acquired by PX Holding(5)...............  $154,376,801     $40,058,550      $6,927,165       $12,639,060
  Aggregate Consideration to Panavision
    Stockholders(6).........................  --               $336,618,990     $59,177,781      $107,973,684
ASSUMING SIGNIFICANT SHARE RETENTION
  ALTERNATIVE:
  Number of shares of Panavision Common
    Stock exchanged for the right to receive
    cash....................................  --               12,717,000(7)    2,199,100        0
  Cash consideration received for shares of
    Panavision Common Stock exchanged(4)....  --               $337,000,500     $59,375,700      0
  Number of Shares of Panavision Common
    Stock retained by existing stockholders
    or acquired by PX Holding...............  5,808,750        0                0                4,012,400
  Percentage of shares of Panavision Common
    Stock represented by retained or
    acquired shares.........................  59.1%            0                0                40.9%
  Implied Value of shares of Panavision
    Common Stock retained by existing
    Panavision Stockholders; Purchase Price
    of shares of Panavision Common Stock
    acquired by PX Holding(5)...............  $154,376,801     $0               $0               $105,325,500
  Aggregate Consideration to Panavision
    Stockholders(6).........................  --               $337,000,500     $59,375,700      $105,325,500
</TABLE>
 
- ------------------
 
(1) The Company's directors, officers and key employees and a trust established
    by an officer of the Company, except that an officer of the Company has
    indicated that he may transfer 120,000 of such shares to a charitable
    organization. Not included in Management's consideration are the cash

    payments of $29.3 million in respect of their unexercised Company Stock
    Options. See 'THE MERGER--Interests of Certain Persons in the Merger.'
 
(2) See 'THE MERGER--Election of Cash or Panavision Common Stock' and '--Effects
    of Proration' and '--Election Procedures.'
 
(3) Warburg exchanges shares of Panavision Common Stock for shares of Redeemable
    Preferred Stock; the Redeemable Preferred Stock is thereafter redeemed for
    cash.
 
(4) $27.00 per share for Holders other than Warburg; $26.50 per share for
    Warburg.
 
(5) Implied Value is based upon a price of $26.25 per share of Panavision Common
    Stock, the closing price of such shares on May 1, 1998, the most recent date
    prior to the printing of this Proxy Statement; PX Holding purchase price is
    at $26.69, the Designated Per Share Purchase Price (as defined herein),
    ($26.58 under the Significant Share Alternative) per share.
 
(6) The sum of 'Consideration received for Shares of Panavision Common Stock
    Exchanged' and 'Implied Value of Shares of Panavision Common Stock
    Retained.'
 
(7) Warburg exchanges 10,975,717 shares of Panavision Common Stock for shares of
    Redeemable Preferred Stock and sells 1,741,283 shares of Panavision Common
    Stock to PX Holding; the Redeemable Preferred Stock is thereafter redeemed
    for cash.
 
                                       16

<PAGE>

                        MERGER SUB, PX HOLDING AND MAFCO
 
     PX Holding, an indirect wholly owned subsidiary of Mafco, and Merger Sub, a
wholly owned subsidiary of PX Holding, were organized in connection with the
Merger and have not carried on any activities to date other than those incident
to their formation and transactions contemplated by the Recapitalization
Agreement and the Stockholders Agreement, respectively. The principal offices of
PX Holding and Merger Sub are located at 35 East 62nd Street, New York, New York
10021; telephone number (212) 572-8600. See 'MERGER SUB, PX HOLDING AND MAFCO.'
 
          CONVERSION OF MERGER SUB STOCK AND PX HOLDING STOCK PURCHASE
 
     In the Merger, all of the shares of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted into 10 shares of
Panavision Common Stock. See 'THE MERGER--Conversion of Merger Sub Stock.'
Immediately prior to the consummation of the Merger, PX Holding will purchase
5,784,199 newly issued shares of Panavision Common Stock from the Company (or
4,067,467 newly issued shares of Panavision Common Stock from the Company and
1,741,283 shares of Panavision Common Stock from Warburg, in the event that all
Holders, other than the Company's directors, officers, key employees and a trust
established by an officer of the Company, elect to retain their shares of
Panavision Common Stock (the 'Significant Share Retention Alternative')). See

'THE MERGER--Merger Consideration.'
 
                                  RISK FACTORS
 
     Holders of Panavision Common Stock should carefully consider the following
factors related to the retention of Panavision Common Stock in connection with
their consideration of the Merger: (i) control by Mafco; (ii) substantial
indebtedness, stockholders' deficit, liquidity and capital reserves; (iii)
fraudulent conveyance risks; (iv) stock options; (v) proration relating to
Panavision Common Stock; (vi) delisting; loss of liquidity; reporting
obligations; (vii) difficulty in executing growth strategy; (viii) adverse
effect of an inability to manage growth; (ix) dependence upon feature film
industry; (x) competition; (xi) technological change; (xii) dependence upon key
personnel; (xiii) dependence upon key suppliers; (xiv) international sales and
foreign exchange risk; and (xv) dependence upon manufacturing facility. See
'RISK FACTORS.'
 
                         DISSENTING STOCKHOLDER RIGHTS
 
     Stockholders of the Company are not entitled to appraisal or dissenters'
rights pursuant to Section 262 of the DGCL.
 
                        ELECTION OF PANAVISION DIRECTORS
 
     Upon the consummation of the transactions contemplated by the
Recapitalization Agreement, PX Holding will have the right to designate all
members of the Board of Directors. If the Recapitalization Agreement is approved
and adopted by the Panavision stockholders and the Merger is consummated, all of
the nominees, if elected, will become directors of Panavision immediately after
the Effective Time and are expected to serve from such time until the next
succeeding annual meeting of stockholders. If the Recapitalization Agreement is
not approved, the Merger is not consummated or the nominees are not elected at
the Meeting, an annual meeting of stockholders for 1998 will be scheduled in the
near future. Directors of the Company will be elected by a plurality vote of the
outstanding shares of Panavision Common Stock present in person or represented
by proxy at the Meeting. Under applicable Delaware law, in tabulating the votes,
abstentions from voting on the election of Directors (including broker
non-votes) will be disregarded and have no effect on the outcome of the vote.
 
     THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR. See 'NOMINEES FOR ELECTION
AS DIRECTORS OF PANAVISION.'

                                       17
<PAGE>
                      The Panavision Recapitalization(1)
<TABLE>
<S>                                 <C>                                       <C>
- -----------------------              --------------------------------------   ---------------------------------------------------
|         Mafco       |              |              Holders               |   |                 Warburg Pincus                  |
|     Holdings Inc.   |              |       (other than Warburg)         |   |              Capital Company L.P.               |
- -----------------------              --------------------------------------   ---------------------------------------------------
           |                                        /|\                  |                 /|\            /|\                  |
           |                                         |                   |                  |              |                   |
           |                         $27.00 per share|  745,380 shares   |    11,190,960    |  111,110     |  1,526,040        |
           |                         for 5,466,120   |  of Panavision    |    shares (88%   |  shares of   |  shares of        |
           |                         shares (88% of  |  Common Stock     |    of Warburg's  |  Redeemable  |  Panavision       |
      100% |                         Holders' shares)|  retained (9%     |    shares) of    |  Preferred   |  Common Stock     |
     Owned |                         of Panavision   |  owned upon the   |    Panavision    |  Stock       |  retained (19%    |
           |                         Common Stock    |  Panavision       |    Common Stock  |  redeemed for|  owned upon the   |
           |                                         |  Recapitalization)|    exchanged for |  equivalent  |  Panavision       |
           |                                         |                   |    111,110 Shares|  of $26.50   |  Recapitalization)|
           |                                         |                   |    of Redeemable |  per share of|                   |
           |                                         |                   |    Preferred     |  Panavision  |                   |
- -----------------------                              |                   |    Stock         |  Common Stock|                   |
|      PX Holding     |                              |                   |                  |              |                   |
|     Corporation     |                              |                   |                  |              |                   |
- -----------------------  _                           |                   |                  |              |                   |
           |            |\                           |                   |                  |              |                   |
           |              \ $154 million             |                   |                  |              |                   |
           |               \ for purchase of         |                   |                  |              |                   |
           |                \ 5,784,199 newly        |                   |                  |              |                   |
           |                 \ issued shares         |                   |                  |              |                   |
      100% |                  \ of Panavision        |                   |                  |              |                   |
     Owned |                   \ Common Stock        |                   |                  |              |                   |
           |                    \ (72% owned upon    |                   |                  |              |                   |
           |                     \ the Panavision    |                   |                  |              |                   |
           |                      \ Recapitalization)|                   |                  |              |                   |
           |                       \                 |                   |                  |              |                   |
           |                       _\|              \|/                 \|/                \|/            \|/                 \|/
- ----------------------               ---------------------------------------------------------------------------------------------
|     PX Merger      |   Merger    \ |                                       Panavision Inc.                                     |
|    Corporation     |-------------- |                             (to be the Surviving Corporation)                             |
- ----------------------             / ---------------------------------------------------------------------------------------------
</TABLE>

1) Assumes 88% of the Holders' share of Panavision Common Stock are exchanged
for cash and that 88% of Warburg's shares of Panavision Common Stock, which are
exchanged for Redeemable Preferred Scock, is thereafter redeemed for cash.
 
                                       18

<PAGE>

                SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
 
     The following table sets forth selected historical consolidated financial
data for the Company for each of the fiscal years in the five year period ended
December 31, 1997. The selected historical consolidated financial data for each
of the fiscal years in the five year period ended December 31, 1997 have been
derived from the Company's audited financial statements. See 'AVAILABLE
INFORMATION' and 'INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.'
 
<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                        --------------------------------------------------------
                                                          1993        1994      1995(A)     1996(B)     1997(C)
                                                        --------    --------    --------    --------    --------
                                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                     <C>         <C>         <C>         <C>         <C>
INCOME STATEMENT DATA:
Revenue..............................................   $ 66,710    $ 77,100    $ 95,328    $124,638    $176,863
Gross margin.........................................     30,278      36,105      50,959      65,165      85,984
Operating income.....................................      9,131      14,453      19,487      30,167      33,915
Net income...........................................   $  3,305    $  7,078    $  5,563    $ 13,271    $ 19,488
Basic earnings per common share......................   $    .24    $    .52    $    .41    $    .94    $   1.07
Shares used in computation...........................     13,706      13,706      13,706      14,130      18,174
Diluted earnings per common share....................   $    .22    $    .46    $    .36    $    .84    $   1.03
Shares used in computation...........................     15,277      15,277      15,277      15,733      19,012
 
BALANCE SHEET DATA (AT PERIOD END):
Total assets.........................................   $140,075    $149,707    $165,751    $176,746    $281,937
Total long term debt (including current portion).....    139,500     131,000     128,952      60,000     125,382
Stockholders' (deficit) equity.......................     (6,706)        922       6,456      93,018     109,444
Stockholders' (deficit) equity per common share......       (.49)        .07         .47        5.12        5.78
</TABLE>
 
- ------------------------
(a) Includes operating results of Panavision Canada Corporation, a former agent,
    since January 20, 1995, the date
    of its acquisition.
 
(b) Includes operating results of Lee Lighting Limited since July 1, 1996, the
    effective date of its acquisition.
 
(c) Includes operating results of Visual Action Holdings plc's Film Services
    Group ('Film Services Group' or 'FSG') since June 5, 1997, the date of its

    acquisition (the 'FSG Acquisition').
 
                                       19

<PAGE>

                  SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
 
     The following table sets forth selected unaudited pro forma financial data
for the Company, as adjusted to give effect to the Transactions (as defined
herein), which have been derived from, and should be read in conjunction with,
the Unaudited Pro Forma Financial Data, including the notes thereto, appearing
elsewhere in this Proxy Statement. See 'UNAUDITED PRO FORMA FINANCIAL DATA.' The
selected pro forma financial data are presented for illustrative purposes only
and are not necessarily indicative of the operating results or financial
position that would have occurred if the Transactions had been consummated on
the dates indicated, nor are they necessarily indicative of future operating
results or financial position.
 
<TABLE>
<CAPTION>
                                                                                                     YEAR ENDED
                                                                                                  DECEMBER 31, 1997
                                                                                                  -----------------
                                                                                                   (IN THOUSANDS,
                                                                                                  EXCEPT PER SHARE
                                                                                                        DATA)
<S>                                                                                               <C>
PRO FORMA STATEMENTS OF OPERATIONS DATA:
Revenues.......................................................................................       $ 202,846
Cost of revenues...............................................................................         105,726
                                                                                                  -----------------
Gross margin...................................................................................          97,120
Operating costs................................................................................          63,467
                                                                                                  -----------------
Operating income...............................................................................          33,653
Interest expense, net..........................................................................         (39,291)
Other expense (income), net....................................................................          (1,486)
                                                                                                  -----------------
Loss before income taxes.......................................................................          (4,152)
Income tax provision...........................................................................          (2,871)
                                                                                                  -----------------
Net loss.......................................................................................       $  (7,023)
                                                                                                  -----------------
                                                                                                  -----------------
Basic and diluted loss per common share........................................................       $    (.87)
Shares used in the computation.................................................................           8,056
 
PRO FORMA BALANCE SHEET DATA (AT PERIOD END, IN MILLIONS, EXCEPT PER SHARE DATA):
Total assets...................................................................................       $   276.7
Total long term debt...........................................................................           448.9
Stockholders' deficit..........................................................................          (219.7)
Stockholders' deficit per common share.........................................................       $  (27.28)
</TABLE>

 
                                       20

<PAGE>

                        PRICE OF PANAVISION COMMON STOCK
 
     The Panavision Common Stock is listed and traded on the NYSE under the
symbol 'PVI.' The following table shows, for the fiscal periods indicated, the
high and low sales prices of a share of Panavision Common Stock on the NYSE
Composite Transactions Tape.
 
<TABLE>
<CAPTION>
                                                                                 HIGH      LOW
                                                                                 ----      ---
<S>                                                                              <C>       <C>
FISCAL 1996
  Fourth Quarter (November 21, 1996 through December 31, 1996)................    24        18 5/8
 
FISCAL 1997
  First Quarter (ended March 31, 1997)........................................    21 3/8    16 3/8
   Second Quarter (ended June 30, 1997)........................................   20 1/2    16
  Third Quarter (ended September 30, 1997)....................................    22 1/4    18
  Fourth Quarter (ended December 31, 1997)....................................    28 1/4    20 7/8
 
FISCAL 1998
  First Quarter (ended March 31, 1998)........................................    26 3/4    24 7/8
  Second Quarter (through May 1, 1998)........................................    26 9/16   25 11/16
</TABLE>
 
     On December 17, 1997, the last trading day before public announcement of
the execution of the Recapitalization Agreement, the reported high and low price
of Panavision Common Stock on the NYSE Composite Transactions Tape were $28 1/4
and $27 1/8 per share, respectively. On May 1, 1998, the most recent practicable
date prior to the printing of this Proxy Statement, the reported high and low
price of Panavision Common Stock on the NYSE Composite Transactions Tape were
$26 1/4 per share and $26 1/4 per share, respectively.
 
   PANAVISION STOCKHOLDERS SHOULD OBTAIN CURRENT MARKET PRICES FOR PANAVISION
                                 COMMON STOCK.
 
     Since its initial public offering in 1996, the Company has not paid any
cash dividends on Panavision Common Stock, and it does not have any present
intention to commence payment of any cash dividends. The Company intends to
retain earnings to provide funds for the operation and expansion of the
Company's business and to repay outstanding indebtedness. The Company's debt
agreements contain certain covenants restricting the payment of dividends on, or
repurchases of, Panavision Common Stock.
 
                                       21

<PAGE>


                                  RISK FACTORS
 
     Holders of Panavision Common Stock should consider carefully all of the
information contained in this Proxy Statement, including the following factors:
 
CONTROL BY MAFCO
 
     Mafco indirectly owns all of the capital stock of PX Holding. Following the
Panavision Recapitalization, Mafco is expected to own approximately 72% of the
capital stock of Panavision (assuming that an aggregate of 88% of the Holders'
shares of Panavision Common Stock is converted into the right to receive cash).
In the event the Significant Share Retention Alternative occurs, Mafco would
still own 59.1% of the capital stock of Panavision. As a result of the
foregoing, Mafco will be able to direct and control the policies of Panavision,
including mergers, sales of assets and similar transactions.
 
SUBSTANTIAL INDEBTEDNESS; STOCKHOLDERS' DEFICIT; LIQUIDITY AND CAPITAL RESERVES
 
     In connection with consummating the transactions contemplated by the
Recapitalization Agreement, Panavision will enter into or assume certain
financings in connection with the Merger to (i) fund payment of the cash
consideration in the Merger, (ii) repay or repurchase certain indebtedness of
the Company, (iii) make cash payments for unexercised options, (iv) pay the fees
and expenses incurred in connection with the Merger and the Recapitalization
Financings (as defined herein) and (v) fund working capital requirements.
Although the definitive terms of certain of the Recapitalization Financings have
not been finalized as of the date of this Proxy Statement, the Company expects
that such terms will include significant operating and financial restrictions,
such as limits on the Company's ability to incur indebtedness, create liens,
sell assets, engage in mergers or consolidations, make investments and pay
dividends.
 
     As of December 31, 1997, after giving effect to the Panavision
Recapitalization and the Recapitalization Financings, Panavision would have had
$449.3 million of total indebtedness on a pro forma consolidated basis,
consisting of $150.0 million of 9 5/8% Senior Subordinated Discount Notes due
2006 (the 'Notes') to be assumed by the Company, $298.9 million outstanding
under the New Credit Agreement (as defined herein) and $0.4 million of other
consolidated indebtedness, a stockholders' deficit of $219.7 million and a debt
to total capitalization ratio of 1:6. See'THE MERGER--Recapitalization
Financings' and 'UNAUDITED PRO FORMA FINANCIAL DATA.'
 
     Panavision's level of indebtedness could have important consequences for
Panavision, including the following: (i) the ability of Panavision to obtain
additional financing for working capital, capital expenditures, acquisitions,
debt service requirements or other purposes may be impaired; (ii) a substantial
portion of Panavision's cash flow from operations will be required to pay
Panavision's interest expense and principal repayment obligations and will not
be available for its general corporate needs; and (iii) Panavision's flexibility
to adjust to changing market conditions may be limited, and its ability to
compete against its competitors may be reduced. Additionally, the Company will
be required to pay (i) term loan repayments beginning on June 30, 1999 and (ii)
interest on the Notes beginning on August 1, 2002, each of which will reduce
funds available to the Company for other purposes, including implementing its

growth strategy.
 
FRAUDULENT CONVEYANCE RISKS
 
     The incurrence by the Company of indebtedness, including indebtedness in
connection with the Recapitalization Financings, and the subsequent transfer of
a portion of the proceeds thereof to the Company's stockholders to pay the Cash
Price, is subject to review under relevant federal and state fraudulent
conveyance statutes in a bankruptcy, reorganization of rehabilitation case or
similar proceeding or in a lawsuit by or on behalf of unpaid creditors of the
Company. Under these fraudulent conveyance statutes, if a court were to find
that, at the time of the Panavision Recapitalization, (i) the Company incurred
the indebtedness and paid the Cash Price with the intent of hindering, delaying
or defrauding current or future creditors or (ii) (a) the Company received less
than reasonably equivalent value or fair consideration in connection with the
Panavision Recapitalization and (b) the Company (1) was insolvent or was
rendered insolvent by reason of the Panavision Recapitalization, including the
incurrence of the indebtedness related thereto, (2) was engaged in a business or
transaction for which its assets constituted unreasonably small capital, (3)
intended to incur, or believed that it would incur obligations beyond its
ability to pay as such obligations matured (as the foregoing terms are defined
in or interpreted under the fraudulent conveyance statutes) or (4) was a
defendant in an action for money damages, or
 
                                       22

<PAGE>

had a judgment for money damages docketed against it (if, in either case, after
final judgment the judgment is unsatisfied), such court could determine that the
payment of the Cash Price to stockholders of the Company violated applicable
provisions of U.S. Bankruptcy code or applicable state fraudulent conveyance
laws, which determination would permit the bankruptcy trustee or debtor in
possession or unpaid creditors to avoid the payment of the Cash Price and
recover the Cash Price from the Company's stockholders.
 
     In the course of its deliberations concerning the Recapitalization
Agreement, the Board was advised of the fraudulent conveyance risks and the
relevant legal principles set forth above. As a result, in order to protect the
Company and its stockholders, the Recapitalization Agreement contains a
provision requiring that, as a condition to consummation of the Merger, the
Company and the Board receive an opinion from an independent expert as to the
solvency of the Company after giving effect to the Merger and the Panavision
Recapitalization. In this regard, Murray, Devine & Co., Inc. has been retained
to provide its opinion as to certain matters that relate to the solvency of the
Company and its subsidiaries, taken as a whole, immediately after giving effect
to the Panavision Recapitalization. A summary of the form of opinion is set
forth under 'THE MERGER--The Solvency Opinion.' There can be no assurance,
however that a court would not determine that the Company was insolvent at the
Effective Time and after giving effect to the transactions contemplated by the
Recapitalization Agreement and the Stockholders Agreement.
 
STOCK OPTION
 

     Pursuant to the Stockholders Agreement, for a period of one year beginning
on the first anniversary of the Effective Time of the Merger and ending on the
second anniversary of the Effective Time of the Merger, Warburg may exercise its
option to require Mafco to purchase Warburg's remaining shares for $25.00 per
share and Mafco may exercise its option to require Warburg to sell its remaining
shares to Mafco for $30.00 per share. As a result of proration, other Holders
may be required to retain shares of Panavision Common Stock without being party
to a similar option.
 
PRORATION RELATING TO PANAVISION COMMON STOCK
 
     Shares of Panavision Common Stock for which a Holder makes an Election to
receive cash or for which no Election is made shall be exchanged for the right
to receive $27.00 per share. However, if the aggregate number of Cash Election
Shares is more than 5,466,120, representing more than 88% of all Holders' shares
of Panavision Common Stock, such electing Holder will be required to retain
shares of Panavision Common Stock for a portion of such Holder's Panavision
Common Stock, not greater than 12%, as to which such Holder had not made an
Election for Non-Cash Election Shares as a result of the proration procedures
described herein under 'THE MERGER.'
 
     Accordingly, if the Merger is consummated, Holders who elect cash will not
necessarily receive the type of consideration specified in their election. If
all Holders elected cash in respect of all of their shares, each Holder would be
required to retain 12% of his or her shares. There can be no assurance as to the
price at which shares of Panavision Common Stock would trade at the Effective
Time of the Merger or at any time thereafter; however, based on a price of
$26 1/4 per share of Panavision Common Stock (the most recent trading price
prior to the printing of this Proxy Statement), if Panavision Stockholders were
required to retain 12% of their shares of Panavision Common Stock as a result of
proration, a stockholder holding 100 shares of Panavision Common Stock would
receive $2,376 in cash and would be required to retain shares with a value of
$315.00, resulting in aggregate consideration of $2,691, or $26.91 per share, as
compared with $27.00 per share if cash had been received for all shares of
Panavision Common Stock. As indicated under '--Delisting; Loss of Liquidity;
Reporting Obligations,' subsequent to the Merger, stockholders may experience
difficulty selling shares of Panavision Common Stock or obtaining prices that
reflect the value thereof.
 
DELISTING; LOSS OF LIQUIDITY; REPORTING OBLIGATIONS.
 
     The Company believes that neither the Merger nor the Panavision
Recapitalization has a reasonable likelihood or purpose of causing Panavision
Common Stock to cease being listed on the NYSE following the Effective Time of
the Merger. However, although it is currently intended that the shares of
Panavision Common Stock will continue to be listed on the NYSE immediately
following the Effective Time of the Merger, there is no obligation for the
Company to maintain the NYSE listing. In addition, there is a possibility that,
following the Merger, the total number of beneficial holders of Panavision
Common Stock will fall below the 400 beneficial
 
                                       23

<PAGE>


holders required for Panavision Common Stock to maintatin its NYSE listing.
Accordingly, there can be no assurance that the Company will maintain its NYSE
listing following the Effective Time of the Merger. Notwithstanding the
foregoing, the Company expects that it will satisfy the applicable listing
criteria at the Effective Time of the Merger, based upon the fact that the
Company has approximately 2,100 stockholders and upon the assumption, which the
Company believes to be reasonable, that more than 400 of these stockholders will
retain shares, either through Election or proration. In that connection, the
Company will use its best efforts to maintain its listing on the NYSE. Any 
delisting of Panavision Common Stock, together with the substantial decrease in
the number of shares of Panavision Common Stock to be held by holders thereof
other than PX Holding, is expected to result in a substantial decrease in
liquidity of Panavision Common Stock, even if the Company continues to be a
reporting company under the Exchange Act and continues to file the periodic
reports required to be filed thereunder.
 
     Upon any such delisting, shares of Panavision Common Stock may trade only
in the over-the-counter market. Although prices in respect of trades may be
published by the National Association of Securities Dealers, Inc. on its
electronic bulletin board and 'pink sheets,' quotes for such shares would not be
as readily available. As a result, it is anticipated that the shares of
Panavision Common Stock will trade much less frequently relative to the trading
volume of Panavision Common Stock prior to the Merger and stockholders may
experience difficulty selling shares of Panavision Common Stock or obtaining
prices that reflect the value thereof.
 
     The Company expects to continue to be a reporting company under the
Exchange Act and to continue to file periodic reports (including annual and
quarterly reports) following the Merger. The Company will also continue to
provide proxy statements to its stockholders under the Exchange Act, if as a
result of the retention of shares of Common Stock by holders of Panavision
Common Stock with respect to the Merger, the Company has 300 or more holders of
shares of Panavision Common Stock following the Merger. If, however, after one
year following the Merger, there are fewer than 300 holders of shares of
Panavision Common Stock, the Company may cease to be a reporting company under
the Exchange Act. If the Company were to cease to be a reporting company under
the Exchange Act, the information now available to holders of Panavision Common
Stock in the periodic reports would not be available to them as a matter of
right.
 
DIFFICULTY IN EXECUTING GROWTH STRATEGY
 
     The Company's growth strategy is based on the Company's current and
historical operations and the operations of other companies in the entertainment
industry. After the Panavision Recapitalization, the Company's management may
decide to alter or discontinue certain parts of its business strategy described
herein and may adopt alternative or additional strategies, however, the Company
has no such plans to do so at the present time. In addition, there can be no
assurance that such a strategy, if implemented, will be successful or will
improve operating results. Further, other conditions may exist, such as
increased competition, reduction in demand for filmed entertainment or an
economic downturn, which may offset any improved operating results that are
attributable to such a strategy.

ADVERSE EFFECTS OF AN INABILITY TO MANAGE GROWTH
 
     Following the Merger, the Company intends to grow and expand its business
through internal expansion and acquisitions. If such growth occurs, it will
place demands on the Company's management, employees, operations and physical
and financial resources. To manage its growth, the Company must continue to
implement and improve its operational and financial systems and to expand, train
and manage its employee base, and any inability of the Company to attract and
retain the executive and managerial personnel required by its expanding business
could have a material adverse effect on the results of operations and financial
condition of the Company. If the Company's systems, procedures or controls are
not adequate to support the Company's operations, management may not be able to
achieve the expansion necessary to exploit potential market opportunities for
the Company's products. In addition, any anticipated expansion of the Company's
marketing efforts outside of the United States will expose the Company to the
economic, political and regulatory environments within the countries in which
the Company's new and potential customers are located, which may be more
restrictive or burdensome than those in the United States and with which the
Company may be unfamiliar. The Company intends to use cash from operations to
manufacture additional camera systems and purchase other rental equipment as
well as to use cash provided by financing activities to pursue acquisitions.
 
                                       24

<PAGE>

DEPENDENCE UPON FEATURE FILM INDUSTRY
 
     The Company's operations are heavily dependent on the production of feature
films, including, in particular, the U.S. market. During the four year period
including 1993 through 1996, the Company benefitted from an increase in the
number of major studio feature films (and especially large-budget action films),
which tend to use larger camera packages than the feature films made by
independent producers. In 1997 in North America, the major studios started
approximately 38 fewer feature films than in 1996, or a reduction of
approximately 31%, while independent producers started approximately 123 more
feature films than in 1996, or an increase of approximately 34%. Significant
declines in the total number of feature films produced in the future including,
in particular, major studio or large-budget action films, could have a material
adverse impact on the Company's operations.
 
COMPETITION
 
     The market for cinematography equipment is highly competitive, primarily
driven by technology, customer service and, to a lesser extent, price. As a
manufacturer of equipment, the Company has two primary competitors, located in
Europe, who sell their products to rental companies, which then rent the
equipment to the ultimate user. As a renter of equipment, the Company competes
with numerous rental companies, which purchase equipment from other
manufacturers and then rent that equipment to their customers. There can be no
assurance that the Company will be able to continue to develop, manufacture and
market its products successfully against existing or new competitors.
 
TECHNOLOGICAL CHANGE

 
     The motion picture and television industries are subject to technological
change, evolving industry standards, changing customer requirements and
improvements in and expansion of product offerings. The Company's ability to
anticipate and adapt to changes in technology, industry standards, customer
requirements and product offerings and to develop and introduce new and enhanced
products will be significant factors in the Company's ability to remain a leader
in the manufacturing and rental of cinematography equipment. Although the
Company believes it is well-positioned to meet the changing needs of the motion
picture and television industries, there can be no assurance that products or
technologies developed by others will not render the Company's products or
technologies noncompetitive or obsolete.
 
DEPENDENCE UPON KEY PERSONNEL
 
     The Company is dependent upon the continued services of certain key
officers and management personnel. The loss of key personnel could have a
material adverse effect on the Company. The Company believes that its future
success also will depend significantly upon its ability to attract, motivate and
retain additional highly skilled managerial, operational, technical and sales
and marketing personnel. Competition for such personnel is intense, and there
can be no assurance that the Company will be successful in attracting,
assimilating and retaining the personnel it requires to develop, manufacture and
market its products or expand its operations.
 
DEPENDENCE UPON KEY SUPPLIERS
 
     The Company uses outside vendors for the manufacture of certain components
used in its products, such as the grinding, manufacture and polishing of certain
camera lens elements. The Company generally does not have supply contracts with
its outside vendors. Although the Company believes that such vendors could be
replaced, the loss of one or more of such vendors could disrupt the Company's
business.
 
INTERNATIONAL SALES; FOREIGN EXCHANGE RISK
 
     In 1995, 1996 and 1997, approximately 45%, 40% and 54% of the Company's
revenue, respectively, was generated outside of the United States, primarily in
the United Kingdom and Canada. In 1997, as a result of the FSG Acquisition the
Company expanded the scope of its operations outside of the United States and
expects that international operations will continue to account for a significant
and increasing portion of its revenue in future periods. The results of
operations of the Company's foreign subsidiaries are translated from local
currency to United States dollars. Therefore, the Company's results of
operations are affected by fluctuations in exchange rates between such
currencies and the United States dollar. In addition to foreign exchange risk,
international operations are subject to a number of special risks, including
trade barriers, exchange controls, national and
 
                                       25

<PAGE>

regional labor strikes, political risks and risks of increases in duties, taxes

and governmental royalties, as well as changes in laws and policies governing
operations of foreign-based companies. In addition, earnings of foreign
subsidiaries and intercompany payments are subject to foreign income tax rules
that may reduce cash flow available to meet required debt service and other
obligations of Panavision.
 
DEPENDENCE UPON MANUFACTURING FACILITY
 
     The Company's manufacturing facility is located in Woodland Hills,
California. Since the Company is dependent on its manufacturing facility, a
disruption of the Company's manufacturing operations could have a material
adverse effect on the Company's business, financial condition and results of
operations. Such disruption could result from various factors including human
error or a natural disaster such as earthquake, fire or flood. The Company does
not maintain business interruption insurance that would reimburse the Company in
the event of an earthquake.
 
                                  THE COMPANY
 
     Panavision is a leading designer, manufacturer and supplier of high
precision film camera systems, comprising cameras, lenses and accessories, for
the motion picture and television industries. The Company's camera systems are
not available for sale and are rented exclusively through the Company's domestic
and international owned and operated facilities as well as its network of
independent agents. Panavision is recognized in the motion picture and
television industries as the preeminent brand name for cinematography equipment.
Since the Company was founded, Panavision has received two Oscars(Registered)
and 18 Awards for Scientific and Technical Achievement from the Academy of
Motion Picture Arts. Since 1990, two-thirds of the Academy Award nominees for
Best Cinematography and six of the seven cinematographers who have won the
Oscar(Registered) for Best Cinematography, used Panavision camera systems.
 
     Panavision camera systems were used to film nine of the ten box office
films requiring film cameras in each of 1997 and 1996 including Men in Black,
The Lost World (Jurassic Park II), Liar, Liar, Jerry Maguire, My Best Friend's
Wedding, Mission: Impossible, Independence Day, Ransom, Twister and A Time to
Kill. Panavision camera systems were also used to film the 1998 blockbuster hits
Titanic and Tomorrow Never Dies, the latest James Bond film. In addition to
Panavision's involvement in the motion picture industry, a predominant number of
U.S. prime time episodic, or 'series,' television programs that are shot on film
use Panavision camera systems, including Friends and NYPD Blue.
 
     Panavision is the only supplier of cinematography equipment that
manufactures a complete camera system incorporating its own range of proprietary
prime and zoom lenses, the most critical components of a camera system. In 1997,
the Company manufactured 72 new camera systems, which represented an increase of
more than 100% from the previous year. The Company supplies its cinematography
equipment, such as cameras, lenses and accessories to its customers on a project
by project basis. The Company has a rental inventory of over 1,000 cameras,
5,000 lenses and 3,000 accessories. Panavision rents its equipment through 24
owned and operated rental facilities throughout the world and ten independent
agents located in ten cities.
 
     On June 5, 1997, the Company completed the FSG Acquisition for

approximately $61 million in cash. Film Services Group includes camera rental
operations in the United Kingdom, France, Australia and two U.S. cities, Chicago
and Dallas, as well as smaller rental operations in New Zealand, Malaysia and
Indonesia.
 
     In addition to manufacturing and renting camera systems, the Company also
rents lighting, lighting grip, power generation and related transportation
equipment through Lee Lighting Limited ('Lee Lighting'), the largest lighting
rental company in the United Kingdom, as well as through certain of its owned
and operated facilities. Panavision also manufactures and sells lighting filters
and other color-correction and diffusion filters through Lee Filters.
 
                                  THE MEETING
 
MATTERS TO BE CONSIDERED
 
     At the Meeting, the Panavision stockholders will consider and vote on (i) a
proposal to approve and adopt the Recapitalization Agreement, including the
Merger, (ii) the election of eight directors to Panavision's Board of Directors,
(iii) ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for
 
                                       26

<PAGE>

1998, and (iv) such other business as may properly come before the Meeting and
any adjournment or postponement thereof.
 
     If the Recapitalization Agreement is approved by the holders of Panavision
Common Stock, Merger Sub will merge with and into Panavision, and, assuming
Holders of at least 88% of the shares of Panavision Common Stock elect to
receive cash for their shares, PX Holding, a wholly owned subsidiary of Mafco,
the sole stockholder of which is Ronald O. Perelman, will own approximately 72%
of the issued and outstanding Panavision Common Stock, Warburg will own
approximately 19% of the issued and outstanding Panavision Common Stock and the
Holders will own approximately 9% of the issued and outstanding Panavision
Common Stock. In the event that all Holders, other than the Company's directors,
officers and key employees and a trust established by an officer of the Company,
elect to retain their shares of Panavision Common Stock, PX Holding will own
approximately 59.1% of the issued and outstanding Panavision Common Stock, the
Holders will own approximately 40.9% of the issued and outstanding Panavision
Common Stock and Warburg, after selling 1,741,283 shares of Panavision Common
Stock to PX Holding and after exchanging the remainder of its shares of
Panavision Common Stock for Redeemable Preferred Stock pursuant to the
Stockholders Agreement, will not own any of the issued and outstanding
Panavision Common Stock (the 'Significant Share Retention Alternative'). None of
the Company's directors, officers and key employees and a trust established by
an officer of the Company, who hold in the aggregate 2,199,100 shares of
Panavision Common Stock (except that an officer of the Company has indicated
that he may transfer 120,000 of such shares to a charitable organization),
intend to elect to retain any of such shares. Such 2,199,100 shares represent
approximately 35.4% of the shares of Panavision Common Stock held by Holders.
Assuming none of such shares will be Non-Cash Election Shares (that is, the

Holders of such shares do not elect to retain them), and since 745,380 shares
must be Non-Cash Election Shares in order for there not to be proration, unless
approximately 18.6% of the 4,012,400 shares of Panavision Common Stock held by
Holders other than the Company's directors, officers and key employees and a
trust established by an officer of the Company are Non-Cash Election Shares, all
Holders (including the Company's directors, officers and key employees and a
trust established by an officer of the Company) will be subject to proration. If
the Recapitalization Agreement is approved, all the Common Stock of Merger Sub
will be converted into approximately 10 shares of Panavision Common Stock.
Immediately prior to the consummation of the Merger, the Company shall sell to
PX Holding (the 'PX Holding Stock Purchase') the Designated Number of Common
Shares (as defined below) for the Designated Per Share Purchase Price (as
defined below).
 
     Immediately after the Effective Time, assuming 88% of the Holders shares of
Panavision Common Stock are exchanged for cash, there will be approximately
8,055,619 shares of Panavision Common Stock issued and outstanding. In the
occurrence of the Significant Share Retention Alternative, there will be
approximately 9,821,150 shares of Panavision Common Stock issued and
outstanding. See 'THE MERGER' and 'CERTAIN PROVISIONS OF THE RECAPITALIZATION
AGREEMENT.'
 
     The Board of Directors has unanimously approved the Recapitalization
Agreement and recommends a vote FOR approval and adoption of the
Recapitalization Agreement. The Board of Directors also recommends a vote FOR
each of the proposed nominees for election to the Board of Directors and FOR
approval of the ratification of Ernst & Young LLP as the Company's independent
auditors.
 
REQUIRED VOTES
 
     Under the DGCL, a majority of the shares of Panavision Common Stock
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at the Meeting. The affirmative vote of the holders of a majority of the
Panavision Common Stock outstanding on the Record Date will be required in order
to approve and adopt the Recapitalization Agreement. The affirmative vote of the
holders of a plurality of Panavision Common Stock present in person or
represented by proxy at the Meeting will be required to elect each of the
nominees for election to the Company's Board of Directors and the affirmative
vote of the holders of a majority of Panavision Common Stock present in person
or represented by proxy at the Meeting will be required to ratify the selection
of Ernst & Young LLP as the Company's independent auditors and to approve or
adopt other matters as may properly be presented to holders of Panavision Common
Stock at the Meeting. As of this date, Warburg is the beneficial owner, and has
the power to vote and dispose, of 12,717,000 shares of Panavision Common Stock,
representing approximately 67.2% of the issued and outstanding Panavision Common
Stock. PURSUANT TO THE STOCKHOLDERS AGREEMENT, WARBURG HAS AGREED, AMONG OTHER
THINGS, TO VOTE ITS SHARES IN FAVOR OF THE ADOPTION OF THE RECAPITALIZATION
AGREEMENT. ACCORDINGLY, APPROVAL OF THE RECAPITALIZATION
 
                                       27

<PAGE>


AGREEMENT IS ASSURED REGARDLESS OF THE VOTE OF ANY OTHER STOCKHOLDER OF THE
COMPANY. A copy of the Stockholders Agreement is attached as Annex II to this
Proxy Statement. As of May 1, 1998, directors and executive officers of the
Company were beneficial owners of an aggregate of 14,978,539 shares
(approximately 79.1%) of the outstanding shares of Panavision Common Stock,
including the shares of Panavision Common Stock held by Warburg. Mr. Lapidus, a
director of the Company and managing director of EMW LLC (as defined herein),
expressly disclaims beneficial ownership of the 12,717,000 shares of Panavision
Common Stock owned by Warburg. The directors and executive officers of the
Company have indicated that they intend to vote their shares of Panavision
Common Stock in favor of the adoption of the Recapitalization Agreement and the
other proposals. See 'SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.'
 
VOTING AND REVOCATION OF PROXIES
 
     Shares of Panavision Common Stock that are entitled to vote and are
represented by a Proxy properly signed and received at or prior to the Meeting,
unless subsequently properly revoked, will be voted in accordance with the
instructions indicated thereon. If a Proxy is signed and returned without
indicating any voting instructions, shares of Panavision Common Stock
represented by such Proxy will be voted as follows:
 
FOR  the adoption of the Recapitalization Agreement,
 
FOR  the election of each of the eight nominees to the Company's Board of
Directors,
 
FOR  the ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for 1998.
 
The Board of Directors is not currently aware of any business to be acted upon
at the Meeting other than as described herein. If, however, other matters are
properly brought before the Meeting or any adjournments or postponements
thereof, the persons appointed as proxies will have the discretion to vote or
act thereon in accordance with their best judgment, unless authority to do so is
withheld in the Proxy. The persons appointed as proxies will not exercise their
discretionary voting authority to vote any such Proxy in favor of any
adjournments or postponements of the Meeting if instruction is given to vote
against the approval of the Recapitalization Agreement and the other proposals.
 
     Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before the shares represented by such Proxy are voted at
the Meeting by (i) attending and voting in person at the Meeting, (ii) giving
notice of revocation of the Proxy at the Meeting, or (iii) delivering to the
Secretary of Panavision (a) a written notice of revocation or (b) a duly
executed Proxy relating to the same shares and matters to be considered at the
Meeting, bearing a date later than the Proxy previously executed. Attendance at
the Meeting will not in and of itself constitute a revocation of a Proxy. All
written notices of revocation and other communications with respect to
revocation of proxies should be addressed as follows: Panavision Inc., 6219 De
Soto Avenue, Woodland Hills, California 91367, Attention: Secretary, and must be
received before the taking of the votes at the Meeting.
 

RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
 
     Only holders of Panavision Common Stock at the close of business on April
8, 1998 will be entitled to receive notice of and to vote at the Meeting. At the
close of business on April 8, 1998, the Company had outstanding and entitled to
vote 18,928,500 shares of Panavision Common Stock. Shares of Panavision Common
Stock represented by Proxies which are marked 'abstain' or which are not marked
as to any particular matter or matters will be counted as shares present for
purposes of determining the presence of a quorum on all matters, but will not be
counted as votes cast in favor of the matters brought before the stockholders at
the Meeting. Proxies relating to 'street name' shares that are voted by brokers
will be counted as shares present for purposes of determining the presence of a
quorum on all matters, but will not be treated as shares having voted at the
Meeting as to any proposal as to which authority to vote is withheld by the
broker.
 
     The presence, in person or by proxy, at the Meeting of the holders of at
least a majority of the votes entitled to be cast at the Meeting is necessary to
constitute a quorum for the transaction of business. Because the vote on the
Recapitalization Agreement and the ratification of Ernst & Young LLP requires
the approval of a majority of the votes entitled to be cast by the stockholders
of the outstanding shares of Panavision Common Stock, abstentions will have the
same effect as a negative vote on this proposal. However, abstentions from
voting on the election of directors (including broker non-votes) will have no
effect on the outcome of the vote.
 
                                       28

<PAGE>

DISSENTING STOCKHOLDER RIGHTS
 
     Stockholders of the Company are not entitled to appraisal or dissenters'
rights pursuant to Section 262 of the DGCL.
 
SOLICITATION OF PROXIES
 
     The Company will bear the cost of the solicitation of Proxies and the cost
of printing and mailing this Proxy Statement. In addition to solicitation by
mail, the directors, officers and employees of the Company may solicit Proxies
from stockholders of the Company by telephone, telegram or by personal
interview. Such directors, officers and employees will not be additionally
compensated for any such solicitation but may be reimbursed for reasonable
out-of-pocket expenses in connection therewith. Arrangements will also be made
with brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of shares held of
record by such persons and the Company will reimburse such custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses in connection
therewith.
 
PROCEDURE FOR ELECTION OF CONSIDERATION IN THE MERGER
 
     STOCKHOLDERS MAKING AN ELECTION SHOULD RETURN THE ENCLOSED FORM OF ELECTION
(TOGETHER, ONLY IN THE CASE OF NON-CASH ELECTION SHARES, WITH DULY ENDORSED

PANAVISION STOCK CERTIFICATES) AS INSTRUCTED IN THE PROXY STATEMENT. SEE 'THE
MERGER--ELECTION.' SHARES HELD BY STOCKHOLDERS WHO FAIL TO MAKE AN ELECTION WILL
BE DEEMED CASH ELECTION SHARES. STOCKHOLDERS ELECTING TO RECEIVE CASH OR WHO DO
NOT MAKE AN ELECTION SHOULD RETAIN THEIR STOCK CERTIFICATES UNTIL LETTERS OF
TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER. SEE 'THE
MERGER--CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF
CERTIFICATES.'
 
AVAILABILITY OF INDEPENDENT ACCOUNTANTS
 
     Representatives of Ernst & Young LLP, independent accountants of the
Company, will be present at the Meeting, will have the opportunity to make a
statement should they desire to do so and are expected to be available to
respond to appropriate questions.
 
                                       29

<PAGE>

                                   THE MERGER
 
BACKGROUND OF THE MERGER
 
     In early September 1997, James R. Maher, a representative of Mafco, called
John L. Vogelstein, Vice Chairman of EMW LLC, which manages Warburg, the
Company's 67.2% stockholder, to suggest that they meet to discuss the
possibility of Mafco purchasing the Company. At a subsequent meeting on
September 18, 1997, Mr. Maher indicated to Mr. Vogelstein and Sidney Lapidus, a
managing director of EMW LLC, that Mafco would be willing to pay Warburg a
modest premium above the then current market price of $21 7/8 per share. Mr.
Vogelstein and Mr. Lapidus told Mr. Maher that they would consider Mafco's
proposal.
 
     On September 25, 1997, Mr. Maher and William G. Nesbitt, a representative
of Mafco, met with Mr. Lapidus and Edward Johnson to discuss the Company's
operations, financial condition, strategies and prospects. Thereafter, in early
October 1997, Mr. Maher indicated Mafco's interest in acquiring the Company for
a cash price of $25, or perhaps somewhat in excess of $25, per share, subject to
the satisfactory completion of a due diligence review and the negotiation of a
definitive recapitalization agreement. In response, Mr. Maher was informed that
Mafco would have to increase its offer price before the Company would be willing
to engage in serious discussions regarding a transaction. In that regard, Mr.
Lapidus said that Warburg would be interested in selling all of its Shares to
Mafco, but that the price at which it would be willing to sell could well be in
excess of $30 per Share. Messrs. Maher and Lapidus agreed to have further
discussions regarding the feasibility of Mafco's acquiring the Company, as well
as the price to be paid therefor.
 
     On October 8, 1997, Ronald O. Perelman, Chairman of the Board and Chief
Executive Officer of Mafco, Mr. Maher, Mr. Lapidus and William C. Scott,
Chairman of the Board and Chief Executive Officer of the Company, held
discussions relating to Mafco's interest in acquiring the Company. Mr. Maher
requested that certain due diligence materials be provided to Mafco, which the
Company said it would be willing to do subject to Mafco first executing a

confidentiality agreement upon customary terms. On October 8, 1997, a
confidentiality agreement was entered into with the Company (the
'Confidentiality Agreement'). For the next several weeks, confidential
information was provided and preliminary discussions were held among
representatives of the Company, Warburg and Mafco. On October 21, 1997,
representatives of Mafco visited and were given a tour of the Company's facility
in Woodland Hills, California.
 
     On November 3 and November 4, 1997, representatives of Mafco met with
senior management of the Company and with representatives of Warburg and
submitted a preliminary indication of interest, subject to due diligence and
certain other conditions, under which stockholders of the Company would receive
$27.50 per share for approximately 90% of their shares and Mafco would acquire
an approximately 72% interest in the recapitalized Company. The parties also
discussed certain other terms that Mafco would require as a condition to going
forward, including Warburg's binding commitment to support the transaction and
to grant Mafco an option, exercisable between the first and second anniversaries
following the transaction, to purchase any of its Panavision Common Stock not
sold pursuant to the plan of recapitalization.
 
     At the conclusion of the meetings, the parties agreed that Mafco would
continue its due diligence review of the Company and that the parties would
begin the preparation and negotiation of a recapitalization agreement and a
stockholders agreement. Thereafter, from mid-November 1997 through mid-December
1997, Mafco continued its due diligence review of the Company and its operations
and members of senior management of Mafco and its legal advisors negotiated the
terms of a recapitalization agreement and a stockholders agreement with
representatives of the Company, Warburg and their respective legal advisors.
 
     As a result of information obtained during its due diligence investigation
and the expectation that the Company's earnings for the fourth quarter of 1997
would be below analysts' estimates, on November 21, 1997, Mafco advised Warburg
and the Company that it would be revising its indication of interest to lower
the price per Share to be received by stockholders in the Company's
recapitalization. Mafco stated that although it had not yet determined what
price per share it would propose, it believed that such price could be as much
as 10% below the $27.50 per share previously discussed.
 
     A meeting of the Board of Directors of the Company was held on November 24,
1997. At the meeting the Board of Directors ratified the retention of Goldman
Sachs as financial advisor to the Company and the engagement of Willkie Farr &
Gallagher ('Willkie Farr') as legal counsel to the Company in connection with
 
                                       30

<PAGE>

the transaction. During the meeting, representatives of the Company, Warburg,
Goldman Sachs and Willkie Farr reviewed the status of the discussions with
Mafco, the possibility of a recapitalization transaction as opposed to other
alternative transactions, the financial resources available to Mafco in order to
effectuate a transaction and the duties of the directors in connection with the
transaction. The Board of Directors also discussed certain significant matters
on which the parties had not reached agreement, including (i) the timing of the

closing of the transaction and whether the availability of financing would be a
condition to closing, (ii) the termination provisions in any definitive
agreements, (iii) the ability of the Company to respond to unsolicited inquiries
and proposals from third parties interested in the possible acquisition of the
Company and to provide information to, and enter into discussions and
negotiations with, such parties, and (iv) agreements committing Warburg to
support a proposed transaction.
 
     Between November 24, 1997 and early December 1997, representatives of
Mafco, Warburg and the Company had several further meetings to discuss the
possible terms of a transaction which would result in a leveraged
recapitalization of the Company. By mid-December, the parties had agreed in
concept, subject to the completion by Mafco of its due diligence review and the
negotiation of definitive documentation, to a recapitalization of the Company
under which Warburg would receive $26.50 per Share for 88% of the Panavision
Common Stock held by it, the Company's other stockholders would be offered
$27.00 per share for 88% of the Panavision Common Stock held by them and Mafco
would acquire approximately 72% of the shares of Panavision Common Stock of the
recapitalized Company for an aggregate of approximately $154 million, or $26.69
per share.
 
     At a meeting of the Board of Directors of the Company held on December 17,
1997, at which all directors were present and participated, Goldman Sachs
reviewed with the Board the status of the Mafco recapitalization proposal and
its financial and valuation analyses of the proposal. Willkie Farr reviewed the
terms of the proposed definitive recapitalization agreement and related
agreements. Goldman Sachs delivered its oral opinion (subsequently confirmed in
writing) that, subject to the assumptions made, matters considered and limits on
its review stated in its opinion, the Aggregate Consideration to be received by
the Holders was fair from a financial point of view to such Holders. See 'THE
MERGER--Opinion of Goldman Sachs.' The directors then continued their discussion
and consideration of the proposed transactions.
 
     Following discussion, the Board of Directors unanimously approved the
Recapitalization Agreement and the transactions contemplated thereby and
authorized the execution of the Recapitalization Agreement on behalf of the
Company.
 
     The Board of Directors did not appoint a special committee. The Board of
Directors, however, including Ms. Wenig and Mr. Ryckman, neither of whom are
officers or employees of the Company or any of its affiliates, unanimously
approved the Panavision Recapitalization and the transactions contemplated
thereby.
 
     On the morning of December 18, 1997, the Company, PX Holding and Merger Sub
executed the Recapitalization Agreement, the Company, Warburg and Mafco executed
the Stockholders Agreement and a press release was issued.
 
     On April 16, 1998, the Company, Warburg and Mafco executed an amended and
restated Stockholders Agreement.
 
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER
 
     The Board of Directors, after careful consideration, has unanimously

approved the Recapitalization Agreement and has determined that the
Recapitalization Agreement and the transaction contemplated thereby are fair to
and in the best interests of the Company and its stockholders and recommends
that holders of Common Stock vote FOR approval and adoption of the
Recapitalization Agreement. Prior to approving the Recapitalization Agreement
and transactions contemplated thereby, the Board of Directors discussed with its
advisors alternatives available to the Company, including the possibility of
alternative purchasers, whether the timing of a transaction such as the
Panavision Recapitalization or another type of transaction was in the best
interests of the Company and its stockholders, and whether the Merger itself was
advisable and in the best interests of the Company and its stockholders. The
Board of Directors believed that there were only a limited number of purchasers
that might be interested in a possible transaction with the Company due to (i)
to the highly specialized nature of the Company's business which the Board of
Directors considered in determining the Company's potential marketability to
purchasers
 
                                       31

<PAGE>

outside of the entertainment industry; (ii) the fact that Panavision is the
leader in an otherwise fragmented rental market for cinematography equipment,
thereby making it unlikely that a potential purchaser would emerge from among
the Company's competitors; and (iii) the Company's extensive relationships with,
and knowledge concerning, most of the major companies in the entertainment
industry and its assessment that a transaction between the Company and any of
such companies was highly unlikely. In considering these possibilities, the
Board of Directors determined that none of such alternatives, even if
successfully carried to completion, would likely have resulted in per-share cash
consideration payable to the Holders as high as the consideration payable under
the Recapitalization Agreement. This latter analysis was based on the historical
stock trading prices of the Company, the willingness of Mafco to purchase 88% of
the Panavision Common Stock, the fact that the Company's earnings estimates for
the fourth quarter of 1997 would be below analysts' expectations and the
Company's belief that the disclosure of its earnings estimates would have a
greater negative effect on any new proposed purchaser than on the negotiations
with Mafco. Because of these factors, and the perceived possibility of Mafco
withdrawing its offer if a solicitation process were commenced, the Board of
Directors decided not to instruct Goldman Sachs to engage in a solicitation of
other parties' interests in the Company. In the course of reaching its decision
to approve the Recapitalization Agreement and the Merger, the Board of Directors
consulted with the Company's legal and financial advisors and considered the
following principal factors which were material to the Board's decision:
 
          (1) The fact that Warburg holds approximately 67.2% of the outstanding
     shares of Panavision Common Stock and had indicated to the Board that it
     believed that the Recapitalization Agreement and the consideration to be
     received in the Merger were in the best interests of the Company and its
     stockholders and agreed to accept $0.50 per share less than the
     consideration to be received by the Holders who elect to receive Cash
     Election Shares.
 
          (2) The terms and conditions of the Recapitalization Agreement and

     other documents to be executed in connection with the Merger, including the
     amount and form of the consideration, the conditions to closing and the
     degree of flexibility provided to the Company to conduct its business prior
     to the closing.
 
          (3) The opinion of Goldman Sachs delivered to the Board of Directors
     to the effect that, as of December 18, 1997, and based upon the assumptions
     made, including an assumption that Holders will receive the Aggregate Cash
     Consideration, defined as cash for approximately 88% of their shares of
     Panavision Common Stock and retention of the balance of such shares,
     matters considered and limits of review set forth in such opinion, the
     Aggregate Consideration to be received by the Holders in the Merger was
     fair to such Holders from a financial point of view, and the presentation
     of Goldman Sachs at the December 17, 1997 Board meeting in connection with
     its opinion. Since Goldman Sachs considered this Aggregate Consideration
     fair from a financial point of view, the Board of Directors believed that
     any proration procedures, equitably applied to all Holders to achieve the
     Aggregate Consideration, would not have weighed against the fairness of the
     transaction. In that regard, the Board of Directors noted that, in its
     written opinion, dated December 18, 1997, Goldman Sachs stated that it was
     not expressing any view as to the election or proration procedures. See
     'THE MERGER--Opinion of Goldman Sachs.'
 
          (4) The fact that the Recapitalization Agreement and the Stockholders
     Agreement permit the Board of Directors and Warburg to respond to
     unsolicited inquiries and proposals from third parties interested in the
     possible acquisition of the Company and to provide information to, and
     enter into discussions and negotiations with, such parties; and the fact
     that the interests of Warburg are generally aligned with those of the other
     stockholders of the Company in the event unsolicited offers from third
     parties are received.
 
          (5) The fact that the Recapitalization Agreement permits the Board of
     Directors to terminate such agreement for a Superior Proposal without
     payment by the Company of a break-up fee. Additionally, upon such
     termination of the Recapitalization Agreement, Warburg's obligation under
     the Stockholders Agreement to support the Recapitalization Agreement and
     the Merger would also terminate.
 
          (6) The fact that the consideration to be offered to stockholders of
     the Company in the Merger will consist, in the aggregate, of approximately
     88% cash while still affording stockholders who wish to continue to
     participate in the ownership of the Company an opportunity to do so and no
     stockholder will be compelled to relinquish his or her Panavision Common
     Stock for cash.
 
          (7) The fact that the stockholders of the Company will have the right
     to elect to receive cash or to retain Common Stock, subject to proration,
     which right the Board believed would provide the possibility of some
 
                                       32

<PAGE>


     flexibility to any of the Company's stockholders who might desire to retain
     more Panavision Common Stock after the Merger than would automatically be
     retained under a non-election based formula. This election would also
     provide the possibility that the Company's stockholders who desire to
     receive more cash for their shares than would be provided if the merger
     consideration consisted solely of a combination of Panavision Common Stock
     and cash would receive such additional cash if other stockholders elect to
     retain Non-Cash Election Shares.
 
          (8) The terms of Mafco's proposal provide that the Merger is to be
     treated as a recapitalization for accounting purposes and accordingly, the
     transactions will have no impact upon the historical basis of the Company's
     assets and liabilities. The Board discussed that the financings
     contemplated as part of the Panavision Recapitalization may include
     operating and financial restrictions.
 
          (9) The volume of shares of Panavision Common Stock traded at specific
     prices and the total value of Panavision Common Stock traded as a
     percentage of Panavision Common Stock outstanding during the period from
     November 21, 1996, the date of the Company's initial public offering, to
     December 16, 1997. Goldman Sachs' presentation indicated a weighted average
     market price of $19.89 per share of Panavision Common Stock during this
     time period. The Board of Directors believed that given this historical
     stock trading analysis, the premium of 3.8%, 63.6% and 36% to the high, low
     and weighted average traded market price of the Panavision Common Stock
     during this period, represented by the $27.00 per share cash consideration,
     supported its determination that the Merger was fair to the stockholders of
     the Company. In reaching its determination, the Board of Directors was
     aware that on December 17, 1997, the last trading day before public
     announcement of the execution of the Recapitalization Agreement, the
     reported high and low price of Panavision Common Stock on the NYSE
     Composite Transactions Tape exceeded $27.00 per share. See '--Opinion of
     Goldman Sachs' and 'PRICE OF PANAVISION COMMON STOCK'.
 
          (10) The fact that after the Merger, stockholders may experience
     difficulty selling shares of Panavision Common Stock or obtaining prices
     that reflect the value thereof. See 'RISK FACTORS--Proration Relating to
     Panavision Common Stock.'
 
          (11) The fact that stockholders may be required to retain shares of
     Panavision Common Stock as a result of proration. In that regard, the Board
     of Directors believed that consideration consisting, in the aggregate, of
     88% cash and 12% retained shares of Panavision Common Stock was fair to the
     stockholders of Panavision.
 
          (12) The fact that each holder of a Company Stock Option, including
     the executive officers and directors named under 'Executive Compensation,'
     will be entitled to receive the Cash Price less the exercise price
     applicable to each Company Stock Option at the Effective Time of the
     Merger, and that the executive officers and other employees of the Company
     have received or will receive certain benefits not available to the
     Company's other stockholders, as set forth in '--Interests of Certain
     Persons in the Merger.' The Board of Directors considered the benefits
     executive officers and other employees of the Company have received or will

     receive and upon careful reflection, including the opinion of its financial
     advisors, the Board of Directors did not believe that such benefits weighed
     against the fairness of the transaction, since (i) it is customary for
     executive officers and employees of public companies to receive stock
     options as part of their compensation in recognition of their role in
     increasing stockholder value, (ii) it is customary for these options to be
     exercised in mergers and (iii) the other benefits relating to most of the
     options resulted from actions taken to create beneficial tax results for
     the Company going forward.
 
          (13) The fact that, pursuant to the Warburg Option, Warburg may
     require Mafco to purchase the Warburg Option Shares at $25.00 per share,
     and pursuant to the Mafco Option, Mafco may require Warburg to sell the
     Warburg Option Shares at $30.00 per share, in each case during the period
     beginning on the first, and ending on the second, anniversary of the
     Effective Time.
 
     The foregoing discussion of the information and factors considered by the
Board of Directors is not intended to be exhaustive. However, the Board of
Directors believed that each of the factors enumerated in items (1) through (8)
supported its decision to approve the Recapitalization Agreement, the factor
enumerated in items (9) and (10), above, weighed against its decision to approve
the Recapitalization Agreement and the factors enumerated in items (11) through
(13) were neutral with respect to its decision to approve the Recapitalization
Agreement. In addition, individual members of the Board of Directors may have
given different weights to
 
                                       33

<PAGE>

different factors. On balance, the Board of Directors believed that those
factors supporting its determination to approve the Recapitalization Agreement
substantially outweighed that factor weighing against its decision to approve
the Recapitalization Agreement. In the course of its deliberations, the Board of
Directors did not establish a range of values for the Company; however, based on
the factors outlined above, the Board of Directors determined that the
Recapitalization Agreement and the Merger are fair to, and in the best interest
of, the Company and its stockholders.
 
OPINION OF GOLDMAN SACHS
 
     On December 18, 1997, Goldman Sachs delivered its written opinion to the
Board of Directors of the Company that, as of the date of such opinion, the
Aggregate Consideration to be received by the Holders pursuant to the
Recapitalization Agreement was fair from a financial point of view to such
Holders.
 
     THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED DECEMBER 18,
1997, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
ANNEX III TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE.
STOCKHOLDERS OF THE COMPANY ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS
ENTIRETY.

 
     In connection with its opinion, Goldman Sachs reviewed, among other things,
(i) the Recapitalization Agreement; (ii) the Stockholders Agreement; (iii) the
Annual Report to Stockholders for the year ended December 31, 1996 and the
Annual Report on Form 10-K of the Company for the year ended December 31, 1996;
(iv) certain interim reports to stockholders and Quarterly Reports on Form 10-Q
of the Company; (v) certain other communications from the Company to its
stockholders; and (vi) certain internal financial analyses and forecasts for the
Company prepared by its management without, and after, giving effect to the
Merger. Goldman Sachs also held discussions with members of the senior
management of the Company regarding its past and current business operations,
financial condition and future prospects. In addition, Goldman Sachs reviewed
the reported price and trading activity for the Panavision Common Stock,
reviewed the financial terms of certain recent relevant business combinations
and performed such other studies and analyses as it considered appropriate.
 
     Goldman Sachs has relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and has assumed such accuracy and
completeness for purposes of rendering its opinion. In that regard, Goldman
Sachs has assumed with the Company's consent that the financial forecasts
provided to it and discussed with it with respect to the Company after giving
effect to the Merger, including, without limitation, the Company's capital
structure following the Merger, have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the
management of the Company and that such forecasts will be realized in the
amounts and at the times contemplated thereby. Goldman Sachs has also assumed
with the Company's consent that the Merger will be treated as a recapitalization
in accordance with generally accepted accounting principles. Goldman Sachs has
not made an independent evaluation or appraisal with respect to the assets and
liabilities of the Company or concerning the solvency or fair value of the
Company for any state law or federal bankruptcy law purposes, and Goldman Sachs
has not been furnished with any such evaluation or appraisal. Goldman Sachs was
not requested to solicit, and did not solicit, interest from other parties with
respect to an acquisition of or other business combination with the Company.
Goldman Sachs did not express any opinion on the prices at which the Panavision
Common Stock are likely to trade following the consummation of the Merger, which
may vary depending upon, among other factors, changes in business, market or
general economic conditions, liquidity and other factors that generally
influence the price of securities. Goldman Sachs' advisory services and its
opinion are provided for the information and assistance of the Board of
Directors of the Company in connection with its consideration of the transaction
contemplated by the Recapitalization Agreement and such opinion does not
constitute a recommendation as to how any Holder should vote with respect to
such transaction or what election any Holder should make in connection with the
Merger.
 
     The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its written opinion to the Company's
Board of Directors on December 18, 1997.
 
          (i) Historical Stock Trading Analysis.  Goldman Sachs reviewed the
     historical trading prices and volumes for the Panavision Common Stock. Such
     review included Goldman Sachs' presentation of the volume of shares traded
     at specific prices and the total volume of Panavision Common Stock traded

     as a
 
                                       34

<PAGE>

     percentage of Panavision Common Stock outstanding during the period from
     November 21, 1996 to December 16, 1997. Such presentation indicated a
     weighted average market price of $19.89 per share of Panavision Common
     Stock based on trading prices for the Panavision Common Stock from November
     21, 1996 to December 16, 1997 with the Panavision Common Stock traded in
     such period amounting to 52.3% of the total Panavision Common Stock
     outstanding. Such review also included Goldman Sachs' analysis of the
     indexed historical trading prices of the Panavision Common Stock during the
     period from November 21, 1996 to December 16, 1997 (based on closing prices
     for the Panavision Common Stock from November 21, 1996 to December 16,
     1997) as compared to the Standard & Poor's 500 Index. In addition, Goldman
     Sachs analyzed the consideration to be received by Holders pursuant to the
     Recapitalization Agreement in relation to the high, low and weighted
     average market prices of the Panavision Common Stock (based on trading
     prices for the Panavision Common Stock from November 21, 1996 to December
     16, 1997). Such analysis indicated that the cash price per share of
     Panavision Common Stock to be paid to Holders pursuant to the
     Recapitalization Agreement represented a premium of 3.8% based on the high
     market price of $26.00 per share of Panavision Common Stock on October 21,
     1997, 63.6% based on the low market price of $16.50 per share of Panavision
     Common Stock on May 12, 1997 and 36% based on the weighted average traded
     market price of $19.89 per share of Panavision Common Stock.
 
          On December 17, 1997, the day Goldman Sachs made its presentation to
     the Panavision Board of Directors and the last trading day before public
     announcement of the execution of the Recapitalization Agreement, the
     reported high and low price of Panavision Common Stock on the NYSE
     Composite Transactions Tape exceeded $27.00 per share. See 'PRICE OF
     PANAVISION COMMON STOCK.' However, the price of a company's stock on any
     particular day is not as relevant as its price over an extended time
     period. For that reason, any analysis based on historical trading prices
     generally focuses on trading averages over a period, or periods, of time,
     and not on a trading price on any one day.
 
          (ii) Discounted Cash Flow Analysis.  Goldman Sachs performed a
     discounted cash flow analysis using the Company's management's projections.
     Goldman Sachs calculated a net present value of free cash flows for the
     years 1998 through 2002 using discount rates ranging from 10% to 15% and
     calculated terminal values at the end of the year 2002 based on multiples
     ranging from 6x earnings before interest, taxes, depreciation and
     amortization ('EBITDA') to 9x EBITDA for the year 2002 and using discount
     rates ranging from 10% to 15%. After subtracting net debt, the implied per
     share equity values ranged from $18.04 to $34.72.
 
          (iii) Selected Transactions Analysis.  Goldman Sachs analyzed certain
     information relating to (i) thirteen selected public non-recapitalization
     transactions in various industries since March 1996 that have closed or are
     still pending involving financial sponsors (the 'Public Transactions') and

     (ii) seven private company transactions in various industries since May
     1996 that have closed or are still pending involving financial sponsors
     (the 'Private Transactions'), in each case to derive estimates of the total
     enterprise value as a multiple of latest twelve months ('LTM') EBITDA (the
     'LTM EBITDA Multiple') with respect to and as of the date of such
     transaction. In the case of the Public Transactions, the LTM EBITDA
     Multiple ranged from 5.0x to 18.0x. In the case of the Private
     Transactions, the LTM EBITDA Multiple ranged from 7.9x to 10.5x, with a
     median of 8.5x and a mean of 8.8x. In addition, Goldman Sachs analyzed
     certain information relating to eleven public recapitalization transactions
     since April 1995 in various industries that have closed or are still
     pending (the 'Recapitalization Transactions'). Such analysis indicated that
     for the Recapitalization Transactions (i) the total enterprise value as a
     multiple of LTM EBITDA ranged from 5.8x to 15.3x and (ii) the
     price/earnings ratios ranged from 4.5x to 23.1x. Based on the Company's
     management's projections and assuming the consideration paid is $27.00 per
     share of Panavision Common Stock, (i) the total enterprise value as a
     multiple of the Company's pro forma estimated EBITDA for the year 1997 is
     9.5x, and as a multiple of the Company's estimated EBITDA for the year 1998
     is 8.2x and (ii) the 1997 estimated price/earnings ratio is 27.0x and the
     1998 estimated price/earnings ratio is 23.0x. For purposes of its opinion,
     Goldman Sachs assumed that the Holders will receive $27.00 in cash for
     approximately 88% of their Panavision Common Stock and retain the balance
     of such Panavision Common Stock. The opinion addressed only the Aggregate
     Consideration to be received by the Holders pursuant to the
     Recapitalization Agreement. Goldman Sachs did not express any opinion on
     the prices at which the Panavision Common Stock are likely to trade
     following the consummation of the Merger, which may vary
 
                                       35

<PAGE>

     depending upon, among other factors, the Company's ability to achieve its
     projections, changes in business, market or general economic conditions,
     liquidity and other factors that generally influence the price of
     securities.
 
          (iv) Analysis at Various Prices.  Goldman Sachs used the Company's
     management projections to calculate various multiples over a range of
     prices per share for the years 1997 through 1999. At $27.00 per share of
     Panavision Common Stock, the Company's (a) total enterprise value as a
     multiple of revenues for the years 1997 through 1999 ranged from 2.7x to
     3.7x, (b) total enterprise value as a multiple of EBITDA for the years 1997
     through 1999 (including, in addition, EBITDA on a pro forma basis for the
     year 1997) ranged from 7.3x to 10.5x, (c) total enterprise value as a
     multiple of earnings before interest and taxes ('EBIT') for the years 1997
     through 1999 ranged from 12.9x to 18.3x and (d) total equity value as a
     multiple of net income (excluding pro forma interest expense associated
     with the Merger) for the years 1997 through 1999 ranged from 20.3x to
     27.0x. The analysis indicated that the Company's total enterprise value as
     a multiple of EBITDA on a pro forma basis (giving effect to the acquisition
     of the Film Services Group of Visual Action Holdings Plc effective on June
     5, 1997) for the year 1997 was 9.5x, compared to a LTM EBITDA Multiple

     ranging from 5.0x to 18.0x for the Public Transactions, 7.9x to 10.5x for
     the Private Transactions, and 5.8x to 15.3x for the Recapitalization
     Transactions.
 
          (v) Leveraged Recapitalization Analysis.  Goldman Sachs performed a
     leveraged recapitalization analysis of the Company after giving effect to
     the Merger using the Company's management's projections and Mafco's assumed
     capitalization structure for the Company. The purpose of this analysis was
     to demonstrate the effects that the consideration would have on financial
     data and ratios in such a leveraged transaction (i.e., interest coverage,
     debt repayment and returns on equity). This analysis was meant to provide
     the Board of Directors with a way to quantify, in connection with its
     determination of the fairness of the Aggregate Consideration, the range of
     potential risks and returns of the transaction to Mafco, based on the
     information provided to it by the Company and Mafco. Based on certain
     financial parameters, the Company's debt as a multiple of its EBITDA for
     the years 1998 to 2002 ranged from 3.42x to 5.67x and its EBITDA as a
     multiple of cash interest for the years 1998 to 2002 ranged from 3.34x to
     8.26x. In addition, based on Mafco's average purchase price of $26.69 per
     share of Panavision Common Stock, and (i) based on the Company's total
     enterprise value as a multiple of EBITDA for the years 2000 to 2002 ranging
     from 6.0x to 10.0x, the return to an investor like Mafco (with an average
     purchase price per share of $26.69) for the years 2000 to 2002 ranged from
     -13.9% to 39.0% and (ii) based on the Company's price/earnings ratios for
     the years 2000 to 2002 ranging from 18.0x to 22.0x, the return to an
     investor like Mafco (with an average purchase price per share of $26.69)
     for the years 2000 to 2002 ranged from -11.4% to 18.0%. The foregoing
     ranges of potential risks and returns, considered in the context of the
     ranges derived from the other analyses, were considered by the Board of
     Directors to be supportive of its determination with respect to the
     fairness of the Aggregate Consideration.
 
     The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
the Company or the Panavision Recapitalization. The analyses were prepared
solely for purposes of Goldman Sachs' providing its opinion to the Company's
Board of Directors as to the fairness from a financial point of view of the
Aggregate Consideration to be received by the Holders pursuant to the
Recapitalization Agreement and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Goldman Sachs assumed with the Company's consent that the financial forecasts
provided to it and discussed with it with respect to the Company after giving
effect to the Merger were reasonably prepared on a basis reflecting the best
available estimates and judgments of the management of the Company. However,
analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of the Company, Goldman Sachs or

any other person assumes responsibility if future results are materially
different from those forecast. As described above, Goldman Sachs' opinion to the
Board of
 
                                       36

<PAGE>

Directors of the Company was one of many factors taken into consideration by the
Company's Board of Directors in making its determination to approve the
Recapitalization Agreement. The foregoing summary does not purport to be a
complete description of the analysis performed by Goldman Sachs and is qualified
by reference to the written opinion of Goldman Sachs set forth in Annex III
hereto.
 
     Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with the Company having provided certain investment banking services to
the Company from time to time, including having acted as managing underwriter of
an initial public offering of the Panavision Common Stock in November 1996, and
having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Recapitalization
Agreement. Goldman Sachs has also provided investment banking services from time
to time to Mafco and its affiliates and may continue to do so in the future.
 
     Pursuant to a letter agreement dated November 7, 1997 (the 'Engagement
Letter'), the Company engaged Goldman Sachs to act as its financial advisor in
connection with the contemplated transaction. Pursuant to the terms of the
Engagement Letter, the Company has agreed to pay Goldman Sachs upon consummation
of the Merger a transaction fee of 0.62% of the aggregate consideration, as
defined in the Engagement Letter, paid in the transaction, which is expected to
be approximately $4 million. The Company has agreed to reimburse Goldman Sachs
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws.
 
CERTAIN ESTIMATES OF FUTURE OPERATIONS AND OTHER INFORMATION
 
     The Company does not as a matter of course make public forecasts as to its
future financial performance. However, in connection with preliminary
discussions concerning the feasibility of the Recapitalization Agreement, the
Stockholders Agreement and the transactions contemplated thereby, the Company
prepared and furnished Mafco with certain financial projections which are not
publicly available. The information provided included projections of the
Company's results of operations through 2001, which included the following
information (in $000's):
 
<TABLE>
<CAPTION>
                                                            1998        1999        2000        2001
                                                          --------    --------    --------    --------

<S>                                                       <C>         <C>         <C>         <C>
Total Revenue..........................................   $220,012    $238,114    $257,853    $279,387
Gross Profit...........................................   $109,855    $118,402    $128,259    $139,562
Operating Profit.......................................   $ 45,238    $ 50,395    $ 56,684    $ 63,329
Pre-Tax Income.........................................   $  2,251    $  6,168    $ 11,646    $ 19,035
After-Tax Income.......................................   $  1,576    $  4,318    $  8,152    $ 13,324
</TABLE>
 
     The Company assumed in connection with its projections that a
recapitalization of the Company in which significant additional indebtedness was
incurred had been consummated and that interest expense ranging from
approximately $43 million to approximately $46 million would be incurred in each
of the years 1998 through 2001. Accordingly, the Company's projections of
pre-tax and after-tax income set forth above are not comparable to the Company's
pre-tax and after-tax income for any historical period. Furthermore, the 1998
estimates included in the above table do not reflect certain significant one
time charges, currently estimated to be approximately $57 million, which the
Company will recognize in the quarter in which the Panavision Recapitalization
closes. See 'UNAUDITED PRO FORMA FINANCIAL DATA' elsewhere in this document and
'MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS' in the Company's Annual Report on Form 10-K. Moreover, due to the
anticipated highly leveraged nature of the Company's capital structure
subsequent to the consummation of the Merger, any change in the actual amount of
interest expense from that assumed would have a significant effect on the
Company's net income. See 'UNAUDITED PRO FORMA FINANCIAL DATA.'
 
     The Company made certain additional assumptions in connection with its
projections. Such assumptions, relating to the projected results of operations
for 1998, included: camera revenue increase of 11.2% over 1997 camera revenue; a
4% increase over 1997 figures in lighting revenue; and no increase or decrease
in sales and other revenue from 1997 to 1998. Additionally, a 6% increase in
operating costs, as compared to 1997, was
 
                                       37

<PAGE>

assumed; a $2 million increase from 1997 in depreciation of rental equipment was
assumed; a 4% increase in selling and administrative cost over 1997 costs,
offset by a $1.5 million reduction in 1998 due to certain projected savings, was
assumed; and research and development costs was assumed to increase by 20.6%
from 1997 to 1998.
 
     The Company made additional assumptions in connection with preparing the
financial projections. Such assumptions, concerning the revenue generated by the
Company, included, a growth rate of 10% each year from 1998 through 2001 for
camera rental revenue; a growth rate of 5% each year from 1998 through 2001 for
lighting rental revenue; and a growth rate of 4% each year from 1998 through
2001 for sales and other revenue. In addition, the Company made the following
assumptions relating to certain expenses of the Company: operating costs would
increase by 6% each year from 1998 through 2001; depreciation of rental
equipment would increase by $4.5 million each year from 1998 through 2001;
agent's commissions would increase by 10% per year from 1998 through 2001;
selling, general and administrative costs would increase 5% per year from 1998

through 2001; and research and development costs would increase 7.5% per year
from 1998 through 2001. Other assumptions made by the Company included the
following: other income was assumed to remain constant from 1998 through 2001
and the income tax expense was assumed to be at a 30% provision rate for 1998
and is expected to be closer to the statutory rate beyond 1998 and may be
significantly higher than that depending on, among other factors, the mix of
U.S. and foreign source income.
 
     THE FOREGOING FORECASTS WERE PREPARED SOLELY FOR INTERNAL USE AND NOT FOR
PUBLICATION OR WITH A VIEW TO COMPLYING WITH THE PUBLISHED GUIDELINES OF THE
COMMISSION REGARDING PROJECTIONS OR WITH THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS AND ARE
INCLUDED IN THIS PROXY STATEMENT ONLY BECAUSE THEY WERE FURNISHED TO MAFCO. THE
FORECASTS NECESSARILY REFLECT NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY
PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS AND OTHER MATTERS, MANY OF
WHICH ARE INHERENTLY UNCERTAIN OR BEYOND THE COMPANY'S CONTROL. ONE CANNOT
PREDICT WHETHER THE ASSUMPTIONS MADE IN PREPARING THE FORECASTS WILL BE
ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE
CONTAINED IN THE FORECASTS. THE INCLUSION OF THIS INFORMATION SHOULD NOT BE
REGARDED AS AN INDICATION THAT MAFCO, PX HOLDING, THE COMPANY OR ANYONE WHO
RECEIVED THIS INFORMATION CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE EVENTS,
AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. NONE OF MAFCO, PX HOLDING
OR THE COMPANY ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THE FORECASTS AND THE COMPANY HAS MADE NO
REPRESENTATION TO MAFCO OR PX HOLDING REGARDING THE FORECASTS DESCRIBED ABOVE.
NEITHER THE COMPANY'S AUDITORS NOR ANY OTHER INDEPENDENT ACCOUNTANTS HAVE
COMPILED, EXAMINED OR PERFORMED ANY PROCEDURES WITH RESPECT TO THE COMPANY'S
ESTIMATES, NOR HAVE THEY EXPRESSED ANY OPINION OR ANY OTHER FORM OF ASSURANCE ON
SUCH INFORMATION OR ITS ACHIEVABILITY, AND ASSUME NO RESPONSIBILITY FOR, AND
DISCLAIM ANY ASSOCIATION WITH, THE FOREGOING PROSPECTIVE FINANCIAL INFORMATION.
 
     The Company's projections should be read together with 'RISK FACTORS' and
'UNAUDITED PRO FORMA FINANCIAL STATEMENTS.'
 
MERGER CONSIDERATION
 
  Panavision Common Stock
 
     Subject to certain provisions as described herein, each Holder's issued and
outstanding share of Panavision Common Stock will be either (i) converted into
the right to receive in cash (a 'Cash Election Share') from the Company
following the Merger an amount equal to $27.00 (the 'Cash Price') or (ii) with
respect to which an election to retain Panavision Common Stock has been made and
not revoked in accordance with the Recapitalization Agreement, converted into
the right to retain one fully paid and nonassessable share of Panavision Common
Stock (a 'Non-Cash Election Share').
 
                                       38

<PAGE>

     Warburg will exchange 88% of its shares of Panavision Common Stock (subject
to increase to the extent fewer than 88% of the Holders' shares of Panavision
Common Stock are exchanged for cash) for Redeemable Preferred Stock, redeemable

immediately upon consummation of the Merger at a price equivalent to $26.50 in
cash per share of Panavision Common Stock.
 
ELECTION OF CASH OR PANAVISION COMMON STOCK
 
     Record Holders of shares of Panavision Common Stock will be entitled to
make an Election on or prior to the Election Date to retain Non-Cash Election
Shares or to receive the Cash Price in respect of their Cash Election Shares.
Shares held by Holders who fail to make an Election will be deemed Cash Election
Shares. If the number of Cash Election Shares is greater than the Cash Election
Number, then each Cash Election Share shall receive $27.00 in cash or be
retained as a share of Panavision Common Stock in the following manner: (i) the
Proration Factor shall be determined by dividing the Cash Election Number by the
total number of Cash Election Shares; (ii) the number of Cash Election Shares
converted into cash shall be determined by multiplying the Proration Factor by
the total number of Cash Election Shares covered by such election, rounded down
to the nearest whole number; and (iii) all Cash Election Shares, other than
those shares that shall receive cash under (ii) above, shall be deemed to be
retained shares of Panavision Common Stock (on a consistent basis among Holders
who held shares of Panavision Common Stock as to which they did not make a
Non-Cash Election, pro rata to the number of shares as to which they made such
election).
 
POSSIBLE EFFECTS OF PRORATION
 
     The following examples illustrate the potential effects of proration. The
following examples are based upon there being outstanding 18,928,500 shares of
Panavision Common Stock as of the Effective Time of the Merger.
 
HOLDER A OWNS 100 SHARES AND ELECTS TO RECEIVE CASH FOR ALL OF ITS SHARES OF
PANAVISION COMMON STOCK OR FAILS TO MAKE AN ELECTION.
 
          (i) If other Holders of at least 745,380 shares of Panavision Common
     Stock, representing at least 12% of such Holders' shares of Panavision
     Common Stock, elect to retain shares of Panavision Common Stock, then
     Holder A will receive $2,700.00 in cash (100 shares at $27.00 per share).
 
          (ii) If other Holders of less than 745,380 shares of Panavision Common
     Stock, representing less than 12% of such Holders' shares of Panavision
     Common Stock, elect to retain shares of Panavision Common Stock, then
     Holder A will not receive cash for all of its 100 shares of Panavision
     Common Stock and will be required to retain some shares. In such a case,
     every Holder must retain a small number of shares of Panavision Common
     Stock in order to increase the number of retained shares of Panavision
     Common Stock to 745,380, representing 12% of such Holders' shares of
     Panavision Common Stock. However, even in the case of maximum proration
     (i.e., no Holder elects to retain shares of Panavision Common Stock), on a
     fully diluted basis, Holder A will still be assured of receiving at least
     $2,376.00 in cash (approximately 88% of its shares of Panavision Common
     Stock, or 88 shares of Panavision Common Stock at $27.00 per share) and
     will retain approximately 12% of its shares of Panavision Common Stock, or
     12 shares of Panavision Common Stock.
 
HOLDER B OWNS 100 SHARES AND ELECTS TO RETAIN ALL ITS SHARES OF PANAVISION

COMMON STOCK.
 
          (i) Regardless of how many Holders (including Holder B) elect to
     retain shares of Panavision Common Stock, Holder B will be able to retain
     all 100 of its shares of Panavision Common Stock.
 
HOLDER C OWNS 100 SHARES AND ELECTS TO RETAIN 50 SHARES OF PANAVISION COMMON
STOCK AND ELECTS CASH FOR 50 SHARES OF PANAVISION COMMON STOCK.
 
          (i) Regardless of how many Holders (including Holder C) elect to
     retain shares of Panavision Common Stock or elect Cash Election Shares,
     Holder C will be able to retain all 50 of its Non-Cash Election Shares of
     Panavision Common Stock.
 
          (ii) In the event that Holders (including Holder C) of at least
     745,380 shares of Panavision Common Stock, representing at least 12% of
     such Holders' shares of Panavision Common Stock, elect to retain shares
 
                                       39

<PAGE>

     of Panavision Common Stock, then Holder C will be able to retain its 50
     shares of Panavision Common Stock and will receive $1,350.00 in cash (50
     Shares at $27.00 per share).
 
          (iii) If the Holders (including Holder C) of less than 745,380 shares
     of Panavision Common Stock, representing less than 12% of such Holders'
     shares of Panavision Common Stock, elect to retain shares of Panavision
     Common Stock, then Holder C would be required to retain more than 50 shares
     of Panavision Common Stock. For example, if no Holders other than Holder C
     elected to retain shares of Panavision Common Stock, then all Holders must
     collectively retain an additional 745,330 shares of Panavision Common
     Stock. In this example, Holder C would be required to retain an additional
     6 shares of Panavision Common Stock (for a total of 56 shares of Panavision
     Common Stock) and would receive $1,188.00 in cash (44 shares at $27.00 per
     share). The additional shares of Panavision Common Stock are calculated by
     multiplying the 50 Cash Election Shares of Holder C by a fraction the
     numerator of which is the 745,330 additional shares of Panavision Common
     Stock and the denominator of which is 6,211,500, the total number of
     Holders' shares outstanding, less the 50 retained shares of Panavision
     Common Stock. If the Holders elected to retain more than 50 shares of
     Panavision Common Stock in the aggregate, Holder C would receive less
     shares than in the example above, but would receive commensurately more
     cash.
 
ELECTION PROCEDURE
 
     The Form of Election is being mailed to holders of record of Panavision
Common Stock together with this Proxy Statement.
 
     FOR A FORM OF ELECTION TO BE EFFECTIVE, HOLDERS OF PANAVISION COMMON STOCK
MUST PROPERLY COMPLETE SUCH FORM OF ELECTION (TOGETHER, ONLY IN THE CASE OF
NON-CASH ELECTION SHARES, WITH CERTIFICATES FOR SHARES OF PANAVISION COMMON

STOCK HELD BY SUCH HOLDER, DULY ENDORSED IN BLANK OR OTHERWISE IN FORM
ACCEPTABLE FOR TRANSFER ON THE BOOKS OF THE COMPANY (OR BY APPROPRIATE GUARANTEE
OF DELIVERY AS SET FORTH IN SUCH FORM OF ELECTION)). SUCH FORM OF ELECTION MUST
BE RECEIVED BY THE EXCHANGE AGENT AT ONE OF ITS ADDRESSES LISTED ON THE FORM OF
ELECTION AND NOT WITHDRAWN, BY 5:00 P.M., EASTERN TIME, ON THE ELECTION DATE.
HOLDERS OF PANAVISION COMMON STOCK WHO MAKE AN ELECTION TO RETAIN LESS THAN ALL
OF THEIR SHARES AS NON-CASH ELECTION SHARES WILL RECEIVE A NEW SHARE CERTIFICATE
FROM THE EXCHANGE AGENT FOR THE REMAINDER OF THE SHARES REPRESENTED BY THE OLD
CERTIFICATE.
 
     SHARES HELD BY STOCKHOLDERS WHO FAIL TO MAKE AN ELECTION WILL BE DEEMED
CASH ELECTION SHARES. STOCKHOLDERS ELECTING TO RECEIVE CASH OR WHO DO NOT MAKE
AN ELECTION SHOULD RETAIN THEIR STOCK CERTIFICATES UNTIL LETTERS OF TRANSMITTAL
ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER. SEE 'THE
MERGER--CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF
CERTIFICATES.'
 
     The determinations of the Exchange Agent as to whether Elections have been
properly made or revoked, and when such Elections or revocations were received,
will be binding.
 
MERGER SUB COMMON STOCK AND PX HOLDING STOCK PURCHASE
 
     In the Merger, all shares of stock of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted into ten shares of
Panavision Common Stock. Immediately prior to the consummation of the Merger,
the Company and PX Holding shall consummate the PX Holding Stock Purchase,
pursuant to which the Company shall sell the Designated Number of Common Shares
to PX Holding for the Designated Per Share Purchase Price. As a result of the
Merger, assuming that an aggregate of 88% of the Holders shares of Panavision
Common Stock is converted into the right to receive cash, PX Holding will hold
approximately 5,784,199 newly issued shares of Panavision Common Stock (or
5,808,750 shares of Panavision Common Stock under the Significant Share
Retention Alternative), or approximately 72% of the shares (59.1% of the shares
under the Significant Share Retention Alternative) of Panavision Common Stock
expected to be outstanding immediately after the Merger.
 
                                       40

<PAGE>

     In accordance with the Recapitalization Agreement, the 'Designated Per
Share Purchase Price' shall mean the number obtained by dividing (x) the sum of
(A) the number Cash Election Shares multiplied by $27.00, (B) the number of
Company Stock Options to be cashed out multiplied by $27.00, and (C) 100 times
the number of shares of Redeemable Preferred Stock, multiplied by $26.50, by (y)
the sum of (A) the number of Cash Election Shares, (B) the number of Company
Stock Options to be cashed out, and (C) 100 times the number of shares of
Redeemable Preferred Stock. 'Designated Number of Common Shares' shall mean such
number of shares of Panavision Common Stock which, when added to the number of
shares of Non-Cash Election Shares and the number of shares of Panavision Common
Stock to be retained by Warburg pursuant to the Stockholders Agreement, results
in a number shares of Panavision Common Stock that when multiplied by the
Designated Per Share Purchase Price, shall equal $215,000,000. Assuming that an

aggregate of 88% of the Holders' shares of Panavision Common Stock is converted
into the right to receive cash, the Designated Per Share Purchase Price will be
$26.69; under the Significant Share Retention Alternative, the Designated Per
Share Purchase Price will be $26.58 per share.
 
EFFECTIVE TIME OF THE MERGER
 
     The Merger will become effective upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware or such later date
as is specified in such Certificate of Merger. The filing of the Certificate of
Merger will occur as soon as practicable on or after the satisfaction or waiver
of the conditions to the Merger specified in the Recapitalization Agreement
unless another date is agreed to in writing by the Company and Merger Sub.
Subject to certain limitations, the Recapitalization Agreement may be terminated
by either Merger Sub or the Company if, among other reasons, the Merger has not
been consummated on or before the later of (a) April 30, 1998 and (b) 45 days
after the Commission has declared effective the Proxy Statement (but in no event
later than June 30, 1998). See 'CERTAIN PROVISIONS OF THE RECAPITALIZATION
AGREEMENT--Conditions to the Consummation of the Merger' and '--Termination;
Amendments; Waiver.'
 
CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
 
  Panavision Common Stock
 
     The conversion of shares of Panavision Common Stock into Cash Election
Shares or Non-Cash Election Shares following the Merger will occur at the
Effective Time.
 
     As soon as practicable as of or after the Effective Time, the Exchange
Agent will send a letter of transmittal to each holder of Panavision Common
Stock (other than holders of Panavision Common Stock who have made an Election
to retain all of their shares as Non-Cash Election Shares and who have properly
submitted Forms of Election and share certificates to the Exchange Agent) . The
letter of transmittal will contain instructions with respect to the surrender of
certificates representing shares of Panavision Common Stock in exchange for cash
and, under certain circumstances, certificates representing shares of Panavision
Common Stock to be retained in the Merger.
 
     EXCEPT FOR PANAVISION COMMON STOCK CERTIFICATES SURRENDERED WITH A FORM OF
ELECTION BY HOLDERS OF NON-CASH ELECTION SHARES AS DESCRIBED ABOVE UNDER 'THE
MERGER--ELECTION PROCEDURE,' STOCKHOLDERS OF THE COMPANY SHOULD NOT FORWARD
STOCK CERTIFICATES TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED THE LETTER OF
TRANSMITTAL.
 
     As soon as practicable after the Effective Time, each Holder of an
outstanding certificate or certificates at such time which prior thereto
represented shares of Panavision Common Stock shall, upon surrender to the
Exchange Agent of such certificate or certificates and acceptance thereof by the
Exchange Agent, be entitled to the amount of cash, if any, into which the number
of shares of Panavision Common Stock previously represented by such certificate
or certificates surrendered shall have been converted pursuant to the
Recapitalization Agreement and a certificate or certificates representing the
number of full shares of Panavision Common Stock, if any, to be retained by the

Holder thereof as Non-Cash Election Shares pursuant to the Recapitalization
Agreement. The Exchange Agent will accept such certificates upon compliance with
such reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange thereof in accordance with normal
 
                                       41

<PAGE>

exchange practices. After the Effective Time, there will be no further transfer
on the records of the Company or its transfer agent of certificates representing
shares of Panavision Common Stock which have been converted, in whole or in
part, pursuant to the Recapitalization Agreement into Cash Election Shares, and
if such certificates are presented to the Company for transfer, they will be
canceled against delivery of cash and, if appropriate, certificates for retained
Panavision Common Stock. Until surrendered as contemplated by the
Recapitalization Agreement, each certificate for shares of Panavision Common
Stock will be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the consideration contemplated by the
Recapitalization Agreement. NO INTEREST WILL BE PAID OR WILL ACCRUE ON ANY CASH
PAYABLE AS CONSIDERATION IN THE MERGER.
 
     No dividends or other distributions with respect to retained Panavision
Common Stock with a record date after the Effective Time will be paid to the
Holder of any unsurrendered certificate for shares of Panavision Common Stock
with respect to the shares of retained Panavision Common Stock represented
thereby until the surrender of such certificate in accordance with the
Recapitalization Agreement. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the Holder of the
certificate representing shares of retained Panavision Common Stock issued in
connection therewith, without interest, at the appropriate payment date, the
proportionate amount of dividends or other distributions, if any, with a record
date after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such shares of retained
Panavision Common Stock.
 
CONDUCT OF BUSINESS PENDING THE MERGER
 
     Pursuant to the Recapitalization Agreement, the Company has agreed that
prior to the Effective Time its business and that of its subsidiaries will be
conducted only in the ordinary course of business and in compliance with
applicable law. See 'CERTAIN PROVISIONS OF THE RECAPITALIZATION
AGREEMENT--Conduct of Business Pending the Merger.'
 
CONDITIONS TO THE CONSUMMATION OF THE MERGER
 
     The obligations of Panavision, PX Holding and Merger Sub to consummate the
Merger are subject to various conditions, including, without limitation, (i)
Panavision and PX Holding each having received a solvency letter as to the
solvency of Panavision and its subsidiaries on a consolidated basis after giving
effect to the transactions contemplated by the Recapitalization Agreement, (ii)
obtaining requisite Panavision stockholder approval, (iii) the termination or
expiration of the relevant waiting period under the HSR Act, and (iv) the
absence of any injunction or other legal restraint or prohibition preventing the

consummation of the Merger. See 'CERTAIN PROVISIONS OF THE RECAPITALIZATION
AGREEMENT--Conditions to the Consummation of the Merger' and 'REGULATORY
APPROVALS.' In addition, the obligation of PX Holding and Merger Sub to
consummate the Merger is subject to the absence of any change in or effect on
the business, financial condition or results of operations of the Company and
its subsidiaries that would be materially adverse to the Company and its
subsidiaries taken as a whole.
 
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
 
     In the opinion of Willkie Farr & Gallagher, the following are, under
currently applicable law, the material United States federal income tax
considerations generally applicable to the Merger. The tax treatment described
herein may vary depending upon each stockholder's particular circumstances and
tax position. Certain stockholders (including insurance companies, tax-exempt
organizations, financial institutions or broker-dealers, foreign corporations,
persons who are not citizens or residents of the United States, stockholders who
do not hold their shares as capital assets and stockholders who have acquired
their shares upon the exercise of options or otherwise as compensation) may be
subject to special rules not discussed below. No ruling from the Internal
Revenue Service (the 'IRS') will be requested with respect to the federal income
tax consequences discussed herein. Accordingly, there can be no assurance that
the IRS will agree with the conclusions stated herein. The discussion below is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
'Code'), and regulations, rulings and judicial decisions thereunder as of the
date hereof. Such authorities are subject to repeal, revocation, and amendment
(in each case, possibly with retroactive effect) which may result in federal
income tax consequences different from those discussed below. In addition, this
discussion does not consider the
 
                                       42

<PAGE>

effect of any applicable foreign, state, local or other tax laws. EACH
STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO HIM OR HER OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT
OF ANY FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.
 
  Characterization of the Merger for U.S. Federal Income Tax Purposes
 
     For U.S. federal income tax purposes, Merger Sub will be disregarded as a
transitory entity, and the Merger of Merger Sub with and into the Company will
be treated as a sale of a portion of a tendering stockholder's Panavision Common
Stock to Mafco and as a redemption of a portion of such stockholder's Panavision
Common Stock by the Company. The receipt of cash by a stockholder in exchange
for Panavision Common Stock pursuant to the Merger will be a taxable transaction
for federal income tax purposes. A stockholder will recognize gain or loss
measured by the difference between the cash received in exchange for such
stockholder's shares of Panavision Common Stock pursuant to the Merger and the
adjusted tax basis of such shares. Such gain or loss will generally be capital
gain or loss, and will be long-term capital gain or loss if the stockholder has
held such stock for more than one year. Stockholders who are individuals may
benefit from lower capital gains tax rates if the stockholder's holding period

for their shares of Panavision Common Stock exceeds eighteen months.
 
     Stockholders who elect to retain their Panavision Common Stock or who
receive Panavision Common Stock in connection with the Merger will not recognize
gain or loss with respect to the Panavision Common Stock retained or received by
them.
 
  Federal Income Tax Consequences of the Merger for Non-U.S. Stockholders
 
     Generally, cash received by a foreign stockholder with respect to
Panavision Common Stock exchanged in connection with the Merger will not be
subject to U.S. withholding or other U.S. taxes. A 'foreign stockholder' is any
person who is, for U.S. federal income tax purposes, a foreign corporation, a
non-resident alien individual, a foreign partnership or a foreign estate or
trust.
 
     THOUGH THE FOREGOING ARE THE MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS GENERALLY APPLICABLE TO THE MERGER, DUE TO THE INDIVIDUAL NATURE
OF TAX CONSEQUENCES, THE DISCUSSION DOES NOT ADDRESS ALL FEDERAL INCOME TAX
CONSEQUENCES WHICH MAY BE APPLICABLE TO A PARTICULAR STOCKHOLDER. EACH
STOCKHOLDER IS THEREFORE URGED TO AND SHOULD CONSULT SUCH STOCKHOLDER'S OWN TAX
ADVISOR TO DETERMINE THE TAX CONSEQUENCES TO SUCH STOCKHOLDER, IN THE LIGHT OF
HIS OR HER PARTICULAR CIRCUMSTANCES, OF THE DISPOSITION OF STOCK PURSUANT TO THE
MERGER.
 
ACCOUNTING TREATMENT
 
     The Panavision Recapitalization will be accounted for as a recapitalization
as there will be a significant continuation of stockholder ownership.
Accordingly, the transactions will have no impact on the historical basis of the
Company's assets and liabilities.
 
EFFECT ON STOCK OPTIONS AND EMPLOYEE BENEFIT MATTERS
 
     Each Company Stock Option that is outstanding immediately prior to the
Merger, whether or not vested or exercisable, shall, simultaneously with the
Merger, be canceled in exchange for a prompt payment of a single lump sum cash
payment equal to the product of (i) the number of shares of Panavision Common
Stock subject to such Company Stock Option and (ii) the excess, if any, of the
Cash Price over the exercise price per share of such Company Stock Option.
 
     For a period of at least 18 months following the Effective Time, the
Surviving Corporation (as defined herein) shall provide employee benefit plans,
programs and arrangements, either directly or through a plan of an affiliate
that, in the aggregate, provide benefits not materially less favorable than the
plans currently in effect.
 
                                       43

<PAGE>

INTERESTS OF CERTAIN PERSONS IN THE MERGER
 
     Certain directors and executive officers of the Company have interests,

described herein, that present them with conflicts of interest in connection
with the Merger. The Board of Directors is aware of the conflicts described
below and considered them in addition to the other matters described under 'THE
MERGER--Recommendation of the Board of Directors; Reasons for the Merger.'
 
     Pursuant to the provisions of the Recapitalization Agreement, each holder
of a Company Stock Option, including the executive officers and directors named
under 'Executive Compensation,' shall be entitled to receive the Cash Price less
the exercise price applicable to each Company Stock Option. Accordingly, at the
Effective Time the following individuals will receive cash payments in respect
of their Company Stock Options: William C. Scott, $9,453,036; John S. Farrand,
$7,909,613; Jeffrey J. Marcketta, $3,075,915; and Christopher M.R. Phillips,
$731,779; and all directors and all employees (including the officers named
above) as a group (a total of 36 individuals), $29,263,593. See 'SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT,' 'NOMINEES FOR ELECTION
AS DIRECTORS OF PANAVISION' and 'CERTAIN RELATIONSHIPS AND TRANSACTIONS' for a
description of Management's interests before and after the Panavision
Recapitalization.
 
     In December 1997, in order to facilitate the payment of taxes related to
the exercise of options issued pursuant to the Panavision Stock Option Plan, the
Company made advances to certain officers and key employees in the form of
notes. Notes were issued by Messrs. Scott, Farrand and Marcketta in the amount
of $2,152,503, $3,698,800 and $924,700, respectively. The notes are recourse
obligations and mature on the earlier of December 24, 2000 or the date of
consummation of the Panavision Recapitalization. Interest on the notes is
compounded semiannually at the applicable federal rate in effect on the date the
notes were issued.
 
     Pursuant to the Recapitalization Agreement, the Company has agreed for six
years after the Effective Time to indemnify all present directors and officers
of the Company and its subsidiaries and will, subject to certain limitations,
maintain for four years a directors' and officers' insurance and indemnification
policy containing terms and conditions which are not less advantageous than any
policy which may be in effect prior to the Effective Time. See 'CERTAIN
PROVISIONS OF THE RECAPITALIZATION AGREEMENT--Indemnification; Directors' and
Officers' Insurance.'
 
     Pursuant to the Stockholders Agreement, Warburg has granted Mafco the
option to purchase the remaining Warburg Shares from Warburg at $30.00 per share
and Mafco has granted Warburg the option (the 'Warburg Option') to sell such
Warburg Shares to Mafco at $25.00 per share. These options are exercisable
during the Option Period. In addition, if the Recapitalization Agreement is
terminated in accordance with the Transaction Proposal Termination Provision (as
defined herein), the Company Board Action Provision (as defined herein) or the
Stockholder Approval Termination Provision (as defined herein) of the
Recapitalization Agreement, or the Recapitalization Agreement shall have been
amended to increase the amount of merger consideration, and if Warburg receives
any consideration in connection with a Transaction Proposal or an amended
Recapitalization Agreement, Warburg will pay to Mafco all or a portion thereof.
See 'CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT.'
 
RESALE OF PANAVISION COMMON STOCK FOLLOWING THE MERGER
 

     The Panavision Common Stock to be retained in connection with the Merger
will be freely transferable, except that shares retained by any stockholder who
may be deemed to be an 'affiliate' (as defined under the Securities Act and
generally including, without limitation, directors, certain executive officers
and beneficial owners of 10% or more of a class of capital stock) of the Company
for purposes of Rule 145 under the Securities Act will not be transferable
except in compliance with the Securities Act. This Proxy Statement does not
cover sales of Panavision Common Stock retained by any person who may be deemed
to be an affiliate of the Company.
 
RECAPITALIZATION FINANCINGS
 
     In connection with the Panavision Recapitalization, the Company expects to
(i) enter into a credit agreement with a maximum commitment amount of $340
million, (ii) assume obligations under notes with an aggregate issue price of
$150 million and (iii) receive an equity contribution from PX Holding of
approximately
 
                                       44

<PAGE>

$154 million (collectively, the 'Recapitalization Financings'). It is currently
anticipated that the Recapitalization Financings will be used to (i) fund the
payment of the cash consideration in the Merger, (ii) repay or repurchase
certain indebtedness of the Company, (iii) pay the fees and expenses in
connection with the Merger and the Recapitalization Financings and (iv) provide
for working capital requirements.
 
  9 5/8% Senior Subordinated Discount Notes Due 2006
 
     On February 6, 1998, PX Escrow Corp., a wholly owned subsidiary of PX
Holding ('PX Escrow'), issued 9 5/8% Senior Subordinated Discount Notes Due 2006
(the 'Notes') for gross proceeds of $150 million in an offering to qualified
institutional buyers exempt from registration under the Securities Act pursuant
to Rule 144A and to certain persons in offshore transactions in reliance on
Regulation S thereof (the 'Offering'). The proceeds of the Offering have been
deposited in escrow pending consummation of the transactions contemplated by the
Recapitalization Agreement, at which time the Company will assume (the
'Panavision Assumption') the obligations of PX Escrow under the Notes, the
indenture (the 'Indenture') pursuant to which the Notes were issued and the
escrow agreement governing the escrow. The Company will also assume PX Escrow's
obligations under the purchase agreement relating to the Notes and a
registration rights agreement (the 'Registration Agreement') requiring the
Company to file an exchange offer registration statement or, under certain
circumstances, a shelf registration statement relating to the Notes. As
consideration for its assumption of PX Escrow's obligations under the Notes and
such agreements, the Company will receive approximately $144 million of the
proceeds of the Offering (representing the net proceeds after deducting
discounts and related fees and expenses) together with a portion of the earnings
on the funds deposited in escrow, which funds will be used, in part, to fund the
transactions contemplated by the Recapitalization Agreement.
 
     The Notes are unsecured, subordinated in right of payment to all existing

and future senior debt of the Company and will mature on February 1, 2006. Prior
to February 1, 2002, there will be no periodic cash pay ments of interest on the
Notes, except as described below. The Notes were issued at a substantial
discount from their principal amount at maturity. The accretion of original
issue discount (the difference between the original issue price of the Notes and
their principal amount at maturity) in the period during which the Notes remain
outstanding is calculated on a semi-annual bond equivalent basis using a 360-day
year composed of twelve 30-day months. Such accretion commenced on the date the
Notes were issued and ends on February 1, 2002, at which time the accreted value
of the Notes will equal their aggregate principal amount at maturity of $217.9
million. Thereafter, the Notes will bear interest at a rate equal to 9 5/8% per
annum, payable semiannually commencing August 1, 2002. In addition, if the
Company fails to comply with certain of its obligations under the Registration
Agreement, additional interest will be payable in cash on the Notes.
 
     On and after February 1, 2002, the Company may redeem the Notes in whole at
any time or in part from time to time at the redemption prices specified therein
as a percentage of the then accreted value of the Notes plus accrued and unpaid
interest, if any, to the date of redemption. Prior to February 1, 2002, the
Company may redeem the Notes in whole at a redemption price equal to the then
accreted value of the Notes plus accrued and unpaid interest, if any, to the
date of redemption, plus a specified premium. Prior to February 1, 2001, in
connection with certain public offerings of Panavision Common Stock, the
Company, may, at its option, redeem the Notes at a redemption price equal to
109 5/8% of the then accreted value of the Notes plus accrued and unpaid
interest, if any, to the date of redemption, provided that at least $141.6
million aggregate principal amount at maturity of Notes remains outstanding
after each such redemption.
 
     Upon a change of control of the Company, each holder of the Notes has the
right to require the Company to repurchase all or a portion of such holder's
Notes at a price equal to 101% of the then accreted value of such Notes, plus
accrued and unpaid interest, if any, to the date of repurchase.
 
     The Indenture contains various restrictive covenants, including limitations
on debt, limitations on other senior subordinated debt and secured debt,
limitations on restricted payments, limitations on sales of assets and
subsidiary stock, limitations on transactions with affiliates, limitations on
restrictions on distributions from subsidiaries and limitations on issuances of
guarantees of debt (which, under certain circumstances, may require the Company
to cause certain subsidiaries of the Company to guarantee its obligations under
the Notes).
 
     Events of default under the Indenture include, among other things, (i) a
default continuing for 30 days in the payment of interest when due, (ii) a
default in the payment of any principal when due, (iii) the failure to comply
 
                                       45

<PAGE>

with the covenants in the Indenture, subject in certain instances to grace
periods, (iv) failure to pay other indebtedness of the Company or a Significant
Subsidiary (as defined in the Indenture) in excess of $10 million upon final

maturity or as a result of such indebtedness becoming accelerated and such
default continues for a period of 10 days after notice thereof, (v) certain
events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary and (vi) the failure to pay any judgment in excess of $10
million.
 
  New Credit Agreement
 
     In connection with the Panavision Recapitalization, The Chase Manhattan
Bank ('Chase') will structure, arrange and syndicate senior secured credit
facilities (the 'Credit Facilities') that will be available to the Company in an
aggregate amount of up to $340.0 million, pursuant to definitive credit
documentation to be entered into prior to the consummation of the Panavision
Recapitalization (the 'New Credit Agreement'). The Credit Facilities will be
comprised of (x) a term loan facility (the 'Term Facility') in an aggregate
amount of $240.0 million, consisting of two tranches, one of which will be a
6-year facility in an aggregate principal amount equal to $90.0 million (the
'Tranche A Term Facility') and the other of which will be a 7-year facility in
an aggregate principal amount equal to $150.0 million (the 'Tranche B Term
Facility'), and (y) a 6-year revolving credit facility (the 'Revolving
Facility') in an aggregate principal amount of $100.0 million, of which up to
$20.0 million will be available for the issuance of letters of credit.
Borrowings under the Term Facility will be used to finance, in part, the
Panavision Recapitalization, repay existing borrowings under its existing credit
agreement and to pay related fees and expenses. Borrowings under the Revolving
Facility will be used to finance the working capital and general corporate needs
of the Company and its subsidiaries in the ordinary course of business.
 
     The availability of the Credit Facilities is subject to the satisfaction of
various conditions precedent typical for secured bank loans in general and with
respect to the Panavision Recapitalization in particular, including, among
others, the consummation of the Panavision Recapitalization pursuant to
reasonably satisfactory documentation. The full amount of the Term Facility will
be drawn in a single drawing on the closing date of the Credit Facilities (the
'Closing Date') and any amount repaid or prepaid under the Term Facility may not
be reborrowed. Loans and letters of credit under the Revolving Facility will be
available at any time prior to, in the case of loans, the final maturity of the
Revolving Facility and, in the case of letters of credit, the fifth business day
prior to the final maturity of the Revolving Facility. Amounts repaid under the
Revolving Facility may be reborrowed.
 
     The Tranche A Term Facility shall be repayable in quarterly installments in
an aggregate principal amount for each year following the Closing Date
(commencing with the second year following the Closing Date) as follows: $5.0
million; $10.0 million; $20.0 million; $25.0 million; and $30.0 million,
respectively. The Tranche B Term Facility shall be repayable in quarterly
installments in an aggregate principal amount for each year following the
Closing Date (commencing with the second year following the Closing Date) as
follows: $1.0 million for years two through five; $21.0 million for year six;
and $125.0 million for year seven.
 
     Borrowings under the Credit Facility shall bear interest at a rate per
annum equal to the Alternate Base Rate ('ABR Loans') or the Eurodollar Rate
('Eurodollar Loans') plus, in each case, a margin that will be based on the

performance of the Company at levels to be agreed. The initial margin on loans
under the Revolving Facility and loans under the Tranche A Term Facility shall
be 2.25% for Eurodollar Loans and 1.25% for ABR Loans. The initial margin on
loans under the Tranche B Term Facility shall be 2.50% for Eurodollar Loans and
1.50% for ABR Loans. The Company may select interest periods of one, two, three
or six months for Eurodollar Loans. At any time when the Company is in default
in the payment of any amount of principal due under the Credit Facilities, such
amount shall bear interest at 2% above the rate otherwise applicable. Overdue
interest, fees and other amount shall bear interest at 2% above the rate
applicable to ABR Loans.
 
     The Company will be required to prepay the Term Facility and to permanently
reduce the Revolving Facility with: (i) 100% of the net proceeds of any sale or
issuance of equity (subject to certain exceptions to be agreed upon) or
incurrence of certain indebtedness after the Closing Date by the Company or any
of its subsidiaries; (ii) 100% of the net proceeds of any sale or other
disposition (with customary casualty or condemnation reinvestment provisions to
be agreed) by the Company or any of its subsidiaries of any assets (except for
the sale of inventory in the ordinary course of business and certain other
dispositions to be agreed) and (iii) 75% of excess cash flow (definition to be
agreed) for each fiscal year of the Company (commencing with the fiscal year in
 
                                       46

<PAGE>

which the Closing Date occurs); provided that such percentage shall be 50% if
the leverage ratio (definition to be agreed) at the end of the applicable fiscal
year is equal to or below a level to be agreed upon. All such prepayments shall
be applied, first, to the prepayment of the Term Loans and, second, to the
permanent reduction of the Revolving Facility. Each such prepayment of the Term
Loans shall be applied to the Tranche A Term Loans and the Tranche B Term Loans
ratably and to the installments thereof ratably in accordance with the then
outstanding amounts. If, however, any Tranche A Term Loans are outstanding, each
holder of Tranche B Term Loans shall have the right to refuse all or any portion
of such prepayment allocable to its Tranche B Term Loans, and the amount so
refused will be applied to prepay the Tranche A Term Loans.
 
     Any loans under the Credit Facilities may be prepaid without premium or
penalty (subject to reimbursement of customary breakfunding costs) and
commitments may be reduced by the Company in minimum amounts to be agreed.
Optional prepayments of the Term Loans shall be applied to the Tranche A Term
Loans and the Tranche B Term Loans ratably and to the installments thereof
ratably in accordance with the then outstanding amounts. If, however, any
Tranche A Term Loans are outstanding, each holder of Tranche B Term Loans shall
have the right to refuse all or any portion of such prepayment allocable to its
Tranche B Term Loans, and the amount so refused will be applied to prepay the
Tranche A Term Loans.
 
     The obligations of the Company under the Credit Facilities will be
guaranteed by each of the Company's direct and indirect domestic subsidiaries
(collectively, the 'Guarantors'). The obligations of the Company and the
Guarantors in respect of the Credit Facilities shall be secured by a perfected
first priority security interest in all of such person's tangible and intangible

domestic assets (including, without limitation, intellectual property, real
property, and all of the capital stock of each of the Company's direct and
indirect domestic subsidiaries and 65% of the capital stock of first tier
foreign subsidiaries).
 
     The New Credit Agreement will contain customary representations and
warranties and affirmative and negative covenants. Such documentation will
contain a number of covenants that, among other things, limit indebtedness;
liens; guarantee obligations; mergers; sales of assets; leases; dividends and
other payments in respect of capital stock; capital expenditures; investments;
optional payments and modifications of subordinated and other debt instruments;
transactions with affiliates; sale leasebacks and negative pledge clauses. The
New Credit Agreement will also contain financial covenants including, but not
limited to, minimum interest coverage and maximum leverage.
 
     The New Credit Agreement will contain customary events of default,
including, but not limited to, nonpayment of principal, interest or fees;
material inaccuracy of representations and warranties; violation of covenants;
cross-default; bankruptcy events; material judgments, ERISA; actual or asserted
invalidity of collateral documents; and a change of control of the Company.
 
     Certain fees will be payable with respect to the Credit Facilities,
including (i) a commitment fee equal to the rate of .50% on the average daily
unused portion of the Revolving Facility, payable quarterly in arrears; (ii) a
commission on all outstanding letters of credit at a per annum rate equal to the
margin then in effect with respect to Eurodollar Loans on the face amount of
each such letter of credit; (iii) a fronting fee equal to .25% per annum on the
face amount of each letter of credit, payable quarterly in arrears; (iv) an
annual administration fee and (v) arrangement and other similar fees that will
be paid on or prior to the Closing Date.
 
THE SOLVENCY OPINION
 
     The following is a summary of an opinion, substantially in the form
expected to be delivered at the Effective Time of the Merger (the 'Solvency
Opinion'), by Murray, Devine & Co., Inc. ('Murray Devine'). In the Solvency
Opinion, Murray Devine will state that, based upon the considerations set forth
therein and on other factors it deemed relevant, it is of the opinion that,
after giving effect to the Panavision Recapitalization:
 
          (1) the fair value of the assets of Panavision and its subsidiaries on
     a consolidated basis will exceed their total liabilities (including
     contingent, subordinated, unmatured and unliquidated liabilities);
 
          (2) the present fair saleable value of the assets of Panavision and
     its subsidiaries on a consolidated basis will be greater than the amount
     required to pay their probable liabilities on their existing debts as they
     become absolute and matured;
 
                                       47

<PAGE>

          (3) Panavision and its subsidiaries, on a consolidated basis, will

     have the ability to pay their debts and liabilities (including contingent,
     subordinated, unmatured and unliquidated liabilities) as they mature;
 
          (4) the total consideration used by Panavision and its subsidiaries to
     redeem the Redeemable Preferred Stock will not cause an impairment of
     capital; and
 
          (5) Panavision and its subsidiaries, on a consolidated basis, will not
     have an unreasonably small amount of capital with which to conduct their
     business.
 
     In rendering its opinion Murray Devine made certain assumptions, including
the fact that Panavision would be able to renew its revolving credit commitment
when such commitment expires and will be able to effect a refinancing of its
Term Facility at final maturity.
 
     For purposes of its opinion, the following terms have the meanings set
forth below:
 
        'the assets of Panavision and its subsidiaries'--All assets of
        Panavision and its subsidiaries, recorded on a consolidated basis. Such
        assets shall include all current assets, all fixed assets such as
        property, plant and equipment and all intangible assets including
        contracts, tradenames, trademarks, backlog, licenses, patents and other
        intangible assets including those in the nature of goodwill and going
        concern value.
 
        'fair value'--The total amount at which the assets of Panavision and its
        subsidiaries, on a consolidated basis, would likely sell as part of a
        going concern and for continued use as part of a going concern, within a
        commercially reasonable period of time, between one or more willing
        buyers and a willing seller with neither party being under any
        compulsion to buy or sell and with all parties having reasonable
        knowledge of all facts.
 
        'impairment of capital'--The total consideration used by Panavision and
        its subsidiaries to redeem the Redeemable Preferred Stock exceeds,
        immediately prior to the Panavision Recapitalization, the excess of the
        net assets of Panavision and its subsidiaries over the par value of
        Panavision's issued and outstanding Panavision Common Stock.
 
        'present fair saleable value'--The price that could be obtained in one
        or more arm's length transactions by an independent, willing seller from
        an independent willing buyer with reasonable promptness, each having
        reasonable knowledge of the relevant facts and neither being under any
        compulsion to act and with equity to both.
 
        'liabilities (including contingent, subordinated, unmatured and
        unliquidated liabilities)'--The pro forma debts and liabilities of
        Panavision and its subsidiaries, recorded on a consolidated basis, as of
        the closing date as set forth on the pro forma balance sheet as of
        September 30, 1997 as prepared by management of Panavision, including
        all fees, expenses, and the principal amount of indebtedness being
        incurred in connection with the Panavision Recapitalization through

        borrowings under the New Credit Agreement and the Notes plus
        Panavision's and its subsidiaries' estimated amount of reasonably
        anticipated liabilities that may result from contingencies, including:
        a) pending litigation, asserted claims and assessments, guarantees, and
        other contingent liabilities including, without limitation, employee
        benefit plan liabilities relating to retiree benefits, as well as, b)
        contingent liabilities relating to environmental matters.
 
     The full text of the Solvency Opinion, which sets forth assumptions made,
matters considered and the scope of the review undertaken in connection with the
opinion, is included as an exhibit to the Registration Statement on Form S-4
filed with the Commission on May 4, 1998, and this summary is qualified in its
entirety by reference to the text of such opinion.
 
                                       48

<PAGE>

                       UNAUDITED PRO FORMA FINANCIAL DATA
 
     The following unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1997 gives pro forma effect to the
FSG Acquisition, the Panavision Recapitalization and the Recapitalization
Financings (including the Panavision Assumption) as if such transactions had
been consummated on January 1, 1997. The pro forma condensed consolidated
balance sheet as of December 31, 1997 gives pro forma effect to the Panavision
Recapitalization and the Recapitalization Financings (including the Panavision
Assumption) as if such transactions had been consummated on December 31, 1997.
The pro forma financial statements assume that an aggregate of 88% of the
Holders' shares of Panavision Common Stock is converted into the right to
receive cash. The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable under the
circumstances. The pro forma financial statements do not purport to represent
the results of operations or the financial position of Panavision and its
subsidiaries that actually would have occurred had the foregoing transactions
(the 'Transactions') been consummated on the aforesaid dates.
 
     The pro forma condensed consolidated statements of operations and other
data exclude the following non-recurring charges which will be reflected in the
Company's statement of operations in connection with the Panavision
Recapitalization and the Recapitalization Financings in the period in which the
transaction closes: (i) $29.3 million relating to the cash settlement of
unexercised stock options; (ii) approximately $17.5 million relating to the
purchase by the Company of shares acquired through the exercise of certain stock
options; (iii) $6.0 million relating to transaction expenses; (iv) $2.3 million
increase in the valuation allowance on deferred tax assets in connection with
the Panavision Recapitalization; and (v) an extraordinary charge of $1.8 million
relating to the write-off of deferred financing costs relating to the repayment
of borrowings under the Company's existing credit agreement.
 
     The Panavision Recapitalization will be accounted for as a recapitalization
as there will be a significant continuation of stockholder ownership.
Accordingly, the transaction will have no impact on the historical basis of the
Company's assets and liabilities.

 
     The FSG Acquisition has been recorded under the purchase method of
accounting, and accordingly, FSG's operating results have been included in the
Company's consolidated financial statements since the acquisition date of June
5, 1997. The purchase price of the FSG Acquisition plus direct
acquisition-related costs have been allocated based on fair values of the
acquired assets and assumed liabilities. The Company has also provided
approximately $6.3 million to cover the estimated transaction costs, lease
cancellation costs and severance related to the acquired businesses. Goodwill of
approximately $9.7 million was recognized as part of the transaction and is
being amortized over 30 years. The amounts for FSG included in the accompanying
unaudited pro forma condensed consolidated financial statements for the period
ended December 31, 1997, are based on unaudited management information compiled
for each FSG operation from January 1, 1997 up to the date of the acquisition,
June 4, 1997. See 'INCORPORATION OF DOCUMENTS BY REFERENCE.' All FSG amounts
have been converted into U.S. dollars at the appropriate exchange rates (after
adjustment for minor differences between U.K. and the U.S. generally accepted
accounting principles).
 
                                       49

<PAGE>

                                PANAVISION INC.
      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31, 1997
                                      ------------------------------------------------------------------------------------
                                                HISTORICAL
                                      -------------------------------
                                                           FSG                  PRO FORMA ADJUSTMENTS
                                                     JANUARY 1, 1997       -------------------------------
                                                            TO                 FSG           PANAVISION        PANAVISION
                                      PANAVISION       JUNE 4, 1997        ACQUISITION    RECAPITALIZATION    PRO FORMA(I)
                                      -----------    ----------------      -----------    ----------------    ------------
<S>                                   <C>            <C>                   <C>            <C>                 <C>
Revenues...........................    $ 176,863         $ 27,802            $(1,819)(a)      $     --          $202,846
Cost of revenues...................       90,879           16,751             (1,819)(a)                         105,726
                                                                                 (85)(b)
                                      -----------    ----------------      -----------    ----------------    ------------
Gross margin.......................       85,984           11,051                 85                              97,120
Operating costs....................       52,069           10,488                130(c)          1,531(g)         63,467
                                                                                (500)(d)          (251)(g)
                                      -----------    ----------------      -----------    ----------------    ------------
Operating income (loss)............       33,915              563                455            (1,280)           33,653
Interest income....................          484                                                                     484
Interest expense...................       (6,869)            (280)            (1,471)(e)       (39,775)(h)       (39,775)
                                                                                                 8,620(h)
Foreign exchange loss..............         (105)                                                                   (105)
Other, net.........................        1,315              276                                                  1,591
                                      -----------    ----------------      -----------    ----------------    ------------

Income (loss) before income
  taxes............................       28,740              559             (1,016)          (32,435)           (4,152)
Income tax (provision) benefit.....       (9,252)            (179)               287(f)          6,273(f)         (2,871)
                                      -----------    ----------------      -----------    ----------------    ------------
Net income (loss) before
  extraordinary item...............    $  19,488         $    380            $  (729)         $(26,162)         $ (7,023)
                                      -----------    ----------------      -----------    ----------------    ------------
                                      -----------    ----------------      -----------    ----------------    ------------
Basic earnings (loss) per common
  share............................    $    1.07                                                                $  (0.87)
Shares used in the computation.....       18,174                                                                   8,056
Diluted earnings (loss) per common
  share............................    $    1.03                                                                $  (0.87)
Shares used in the computation ....       19,012                                                                   8,056
</TABLE>
 
     See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
                                  Operations.
 
                                       50

<PAGE>

                               PANAVISION INC.
 
                     NOTES TO UNAUDITED PRO FORMA CONDENSED
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS EXCEPT PER SHARE DATA)
 
(a) To eliminate intercompany revenues between the Company and FSG and the
    related cost of sales.
(b) To adjust depreciation expense for the revaluation of assets and to conform
    estimated useful lives.
(c) To reflect the amortization of goodwill resulting from the FSG Acquisition.
(d) To eliminate management fees paid to Visual Action Holdings, plc.
(e) To reflect higher interest expense due to additional borrowings required for
    the FSG Acquisition.
(f) The pro forma provision for income taxes primarily consists of state, local
    and foreign taxes. Pro forma tax adjustments reflect a benefit for foreign
    taxes related to the FSG Acquisition and the elimination of federal and
    state income taxes (other than certain state minimum taxes) as a result of
    additional interest expense and amortization of deferred charges related to
    the Panavision Recapitalization. The Company has not reflected a federal tax
    benefit relating to its losses as it is more likely than not that it will
    not be able to realize benefit for such losses in the future.
(g) To reflect the elimination of historical amortization of deferred financing
    charges on debt retired and the amortization of deferred financing charges
    on the Notes assumed in connection with the Panavision Recapitalization and
    the New Credit Agreement.
(h) To reflect interest expense on the Notes, compounded semiannually,
    borrowings under the New Credit Agreement and elimination of historical
    interest expense:
 
<TABLE>

<CAPTION>
                                                                                                        YEAR ENDED
                                                                                                       DECEMBER 31,
INTEREST EXPENSE                                                                                           1997
- ----------------------------------------------------------------------------------------------------   ------------
<S>                                                                                                    <C>
  Notes at 9.625%...................................................................................     $ 14,784
  Revolving Facility at 8.13%.......................................................................        4,788
  Tranche A Term Loan at 8.13%......................................................................        7,317
  Tranche B Term Loan at 8.38%......................................................................       12,570
  Other fees........................................................................................          316
                                                                                                       ------------
                                                                                                           39,775
  Interest expense on retired debt..................................................................        8,620
                                                                                                       ------------
  Net interest adjustment...........................................................................     $ 31,155
                                                                                                       ------------
                                                                                                       ------------
</TABLE>
 
     A 0.125% change in the interest rate payable on borrowings under the New
Credit Agreement would change annual interest expense as follows:
 
<TABLE>
<S>                                                                                                   <C>
  Revolving Facility...............................................................................      $    77
  Tranche A Term Facility..........................................................................          113
  Tranche B Term Facility..........................................................................          187
                                                                                                      -------------
                                                                                                         $   377
                                                                                                      -------------
                                                                                                      -------------
</TABLE>
 
     (i) In the event that all Holders, other than the Company's directors,
         officers, key employees and a trust established by an officer of the
         Company, elect to retain their shares of Panavision common stock,
         interest expense, net loss and basic and diluted loss per share would
         be $36,254, $(3,502) and $(.36), respectively. The shares used in
         computation for loss per share would be 9,821. See 'Effect of the
         Panavision Recapitalization.'
 
                                       51

<PAGE>

                                PANAVISION INC.
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  DECEMBER 31, 1997
                                                                     --------------------------------------------

                                                                      ACTUAL     RECAPITALIZATION    PRO FORMA(J)
                                                                     --------    ----------------    ------------
                              ASSETS
<S>                                                                  <C>         <C>                 <C>
Current Assets:
  Cash and cash equivalents.......................................   $ 11,020       $  144,000(a)     $    6,000
                                                                                       293,896(b)
                                                                                       154,377(c)
                                                                                      (444,145)(d)
                                                                                       (29,264)(e)
                                                                                      (124,999)(f)
                                                                                        (6,000)(g)
                                                                                         7,115(i)
  Accounts receivable.............................................     25,645                             25,645
  Inventories.....................................................      8,540                              8,540
  Prepaid expenses and other current assets.......................     16,072           (7,115)(i)         8,957
                                                                     --------    ----------------    ------------
Total current assets..............................................     61,277          (12,135)           49,142
Property, plant and equipment, net................................    199,038                            199,038
Deferred tax assets...............................................      2,329           (2,329)(h)            --
Goodwill..........................................................      9,859                              9,859
Other.............................................................      9,434            6,000(a)         18,612
                                                                                         5,000(b)
                                                                                        (1,822)(f)
                                                                     --------    ----------------    ------------
                                                                     $281,937       $   (5,286)       $  276,651
                                                                     --------    ----------------    ------------
                                                                     --------    ----------------    ------------

 
          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Accounts payable................................................   $  9,819       $       --        $    9,819
  Accrued liabilities.............................................     23,745                             23,745
  Current maturities of long-term debt............................      5,383           (5,000)(f)           383
  Deferred tax liabilities........................................      5,387                              5,387
                                                                     --------    ----------------    ------------
Total current liabilities.........................................     44,334           (5,000)           39,334
Long-term debt....................................................    119,999         (119,999)(f)       448,896
                                                                                       150,000(a)
                                                                                       298,896(b)
Deferred tax liabilities..........................................      6,217                              6,217
Other liabilities.................................................      1,943                              1,943
Common stock......................................................        189               58(c)             81
                                                                                          (166)(d)
Additional paid-in capital........................................     77,053          154,319(c)             --
                                                                                      (231,372)(d)
Retained earnings (accumulated deficit)...........................     34,463         (212,607)(d)      (217,559)
                                                                                       (29,264)(e)
                                                                                        (1,822)(f)
                                                                                        (6,000)(g)
                                                                                        (2,329)(h)
Foreign currency translation adjustment...........................     (2,261)                            (2,261)
                                                                     --------    ----------------    ------------

Total stockholders' equity (deficit)..............................    109,444         (329,183)         (219,739)
                                                                     --------    ----------------    ------------
                                                                     $281,937       $   (5,286)       $  276,651
                                                                     --------    ----------------    ------------
                                                                     --------    ----------------    ------------
</TABLE>
 
     See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
 
                                       52

<PAGE>

                                PANAVISION INC.
       NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
(a) Reflects the assumption of the Notes, net of the initial purchasers'
    discount and related fees and expenses.
 
(b) Reflects borrowings of $298,896 under the New Credit Agreement, net of
    related fees and expenses.
 
(c) Reflects the purchase by PX Holding of 5.8 million shares of Company Common
    Stock at $26.69 per share. See 'Effect of Panavision Recapitalization' and
    'THE MERGER--Merger Sub Common Stock and PX Holding Stock Purchase' for a
    description of the basis for using a $26.69 per share purchase price.
 
(d) Reflects the conversion of 11.2 million shares of Company Common Stock owned
    by Warburg into redeemable preferred stock of the Company and the redemption
    of such stock at a price equivalent to $26.50 in cash per share of Company
    Common Stock and the purchase of 5.5 million shares from the public and
    management at a price of $27.00 per share of which $17,547 will be charged
    to expense in the Company's statement of operations due to the cash
    settlement of shares acquired through the exercise of certain stock options.
 
(e) Reflects the cash payment made to settle unexercised options in connection
    with the Panavision Recapitalization which will be charged to expense in the
    Company's statement of operations.
 
(f) Reflects the payment of existing debt of the Company and the write-off of
    related deferred charges of $1,822.
 
(g) Reflects fees and expenses related to the Panavision Recapitalization which
    will be charged to expense in the Company's statement of operations.
 
(h) Reflects the increase in valuation allowance on deferred tax asset in
    connection with the Panavision Recapitalization.
 
(i) Reflects the repayment of notes due to the Company from officers and key
    employees which are due upon completion of the Panavision Recapitalization.
 
(j) In the event that all Holders, other than the Company's directors, officers,
    key employees and a trust established by an officer of the Company, elect to

    retain their shares of Panavision Common Stock, total debt and Stockholders'
    Deficit would be $403,135 and $173,595, respectively. See 'Effect of
    Panavision Recapitalization.'
 
                                       53

<PAGE>

              CERTAIN PROVISIONS OF THE RECAPITALIZATION AGREEMENT
 
     The following description of the Recapitalization Agreement is necessarily
a summary thereof and is therefore qualified in its entirety by reference to the
Recapitalization Agreement, a copy of which is attached to this Proxy Statement
as Annex I and incorporated herein by reference. Panavision stockholders are
urged to read the Recapitalization Agreement in its entirety.
 
THE MERGER
 
     The Recapitalization Agreement provides that, subject to the satisfaction
or waiver of the other conditions of the Recapitalization Agreement, Merger Sub
shall be merged with and into the Company, whereupon the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the 'Surviving Corporation').
 
     Subject to the satisfaction or waiver of the conditions set forth in the
Recapitalization Agreement, the Company shall execute and deliver to the
Secretary of State of the State of Delaware a duly executed Certificate of
Merger.
 
CERTIFICATE OF INCORPORATION AND BY-LAWS
 
     The Amended and Restated Certificate of Incorporation of the Company will
be the Certificate of Incorporation of the Surviving Corporation following the
Merger until thereafter amended in accordance with the provisions thereof and
applicable law, provided that Section 13(b) shall be restated in its entirety
therein to read as follows, '(b) Expenses incurred in defending a civil or
criminal action, suit or proceeding shall (in the case of any action, suit or
proceeding against a director or officer of the Corporation) be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Section 13;' and further provided, that a new
Section 16 shall be added thereto to read as follows, 'The Corporation expressly
elects not to be governed by Section 203 of the General Corporation Law of the
State of Delaware.'
 
     Section 203 of the DGCL prohibits certain transactions between a Delaware
corporation and an 'interested stockholder,' which is defined therein as a
person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15 percent or more of the outstanding
voting shares of a Delaware corporation. This provision prohibits certain
business combinations (defined broadly to include mergers, consolidations, sales
and other dispositions of assets having an aggregate value in excess of 10
percent of the consolidated assets of the corporation, and certain transactions
that would increase the interested stockholder's proportionate share ownership
in the corporation) between an interested stockholder and a corporation for a
period of three years after the date the interested stockholder acquired its
stock unless: (i) the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder is approved by the

corporation's board of directors prior to the date the interested stockholder
acquired shares, (ii) the interested stockholder acquired at least 85 percent of
the voting stock of the corporation in the transaction in which it became an
interested stockholder, or (iii) the business combination is approved by a
majority of the board of directors and by the affirmative vote of two-thirds of
the votes entitled to be cast by disinterested stockholders at an annual or
special meeting.
 
     The By-Laws of Merger Sub will be the By-Laws of the Surviving Corporation
following the Merger until thereafter amended in accordance with the provisions
thereof and applicable law.
 
BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY FOLLOWING THE MERGER
 
     The directors of Merger Sub immediately prior to the Effective Time will be
the initial directors of the Surviving Corporation, until their respective
successors are duly elected and qualified. The officers of the Company
immediately prior to the Effective Time will be the initial officers of the
Surviving Corporation, until their respective successors are duly elected and
qualified.
 
                                       54

<PAGE>

REPRESENTATIONS AND WARRANTIES
 
     The Recapitalization Agreement contains various representations and
warranties of the Company relating to, among other things, the following matters
(which representations and warranties are subject, in certain cases, to
specified exceptions): (i) the due organization and good standing of the Company
and its significant subsidiaries; (ii) the capitalization of the Company and the
ownership of the capital stock of the Company's significant subsidiaries; (iii)
good and valid title to the Panavision Common Stock to be purchased by PX
Holding and that such shares will be validly issued, fully paid and
nonassessable; (iv) the due authorization of the Company to execute and deliver
the Recapitalization Agreement and related matters; (v) the absence of any
conflicts with the organizational documents or contracts to which the Company
and any of its subsidiaries is a party and the Company's compliance with
applicable law; (vi) the absence of any requirement to receive consent from any
governmental entity in connection with the execution and delivery of the
Recapitalization Agreement by the Company, other than under provisions under the
DGCL and the HSR Act; (vii) due filing of all reports and other documents,
including financial statements, with the Commission and the accuracy of the
information contained therein; (viii) the absence of any report or other
document filed with the Commission that contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ix) due preparation of the audited and
unaudited financial statements in accordance with U.S. generally accepted
accounting principles and the fairness of their presentation of the financial
position and results of operations for the periods reported therein; (x) the
absence of undisclosed liabilities; (xi) the absence of pending or, to the
knowledge of the Company, threatened litigation that would have a material

adverse effect on the Company; (xii) the sufficient title to the Company's real
property; (xiii) the insurance policies are in full force and effect and shall
remain in full force and effect through the closing date; (xiv) the accuracy of
information supplied in this Proxy Statement; (xv) the compliance with the terms
of any employee benefit plan and the compliance of such plans with the Employee
Retirement Income Security Act of 1974, as amended ('ERISA') and any other
applicable law or regulation; (xvi) the filing of tax returns, the payment of
taxes and certain other tax matters; (xvii) compliance with all applicable
environmental laws, regulations and requirements, and the absence of any notices
of pending or, to the best knowledge of the Company, threatened proceedings
regarding environmental violations or liability; (xviii) the absence of certain
changes having a material adverse effect on the Company since September 30,
1997; (xix) the absence of broker's fees and expenses other than those of the
investment bankers; (xx) the receipt by the Company of an opinion from its
investment bankers as to fairness, from a financial point of view, of the
consideration to be received by the stockholders of the Company; (xxi) the
determination of the Board of Directors of the advisability of the Merger as in
the best interest of the stockholders of the Company and the recommendation of
the Board of Directors with respect to the Recapitalization Agreement and
related transactions; (xxii) the required vote of the Company's stockholders
being the only vote of stockholders required to approve the Merger; (xxiii) the
ownership and rights to use of its Intellectual Property (as defined in
Recapitalization Agreement); (xxiv) the absence of certain transactions or other
obligations between the Company and directors, officers, partners, affiliates or
associates; and (xxv) compliance with all applicable laws regarding employment
and employment practices and the absence of any notice of pending claims,
actions or violations.
 
     The Recapitalization Agreement also contains various representations and
warranties of PX Holding and Merger Sub relating to, among other things, the
following matters (which representations and warranties are subject, in certain
cases, to specified exceptions): (i) the due organization and good standing of
PX Holding and Merger Sub; (ii) the due authorization, execution and delivery of
the Recapitalization Agreement and related matters; (iii) the absence of any
conflicts with the organizational documents or contracts to which PX Holding or
Merger Sub is a party and PX Holding's or Merger Sub's compliance with
applicable law; (iv) the absence of any requirement to receive consent from any
governmental entity in connection with the execution and delivery of the
Recapitalization Agreement by PX Holding or Merger Sub; (v) the accuracy of
information supplied in the Registration Statement and this Proxy Statement;
(vi) the capitalization of Merger Sub and the ownership of the capital stock of
Merger Sub; (vii) the absence of PX Holding and Merger Sub engaging in any
business or activity other than in connection with the transactions contemplated
by the Recapitalization Agreement; (viii) that PX Holding will acquire the
Panavision Common Stock for its own account and not with a view towards
distribution; and (ix) the absence of broker's fees in connection with this
transaction.
 
                                       55

<PAGE>

CONDUCT OF BUSINESS PENDING THE MERGER
 

     Prior to the Effective Time of the Merger, unless otherwise agreed to in
writing by PX Holding, the Company and each of its subsidiaries will conduct
their respective businesses, according to its ordinary and usual course of
business consistent with past practice and to use its and their respective
reasonable best efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with them and to preserve goodwill. Except as expressly provided by the
terms and provisions of the Recapitalization Agreement, the Company will not,
and will cause its subsidiaries not to, without the prior consent of PX Holding:
(i) except for certain limited exceptions and in the ordinary course of business
consistent with past practice, increase the compensation or benefits of any
director, officer or employee of the Company or any of its subsidiaries; (ii)
incur any indebtedness except for indebtedness incurred in the ordinary course
of business and consistent with past practice or indebtedness to a direct or
indirect wholly owned subsidiary to the Company or another direct or indirect
wholly owned subsidiary; (iii) enter into any contract or agreement material to
the business, results of operations, or financial condition of the Company and
its subsidiaries taken as a whole other than in the ordinary course of business,
consistent with past practices; (iv) sell, lease or otherwise dispose of any of
its properties or assets other than immaterial properties or assets except (a)
in the ordinary course of business consistent with past practice or (b) as
otherwise reasonably necessary to comply with the terms of (1) any mortgage
liens encumbering such property, (2) insurance requirements or (3) laws, rules
or regulations or any governmental authority; (v) (a) declare, set aside or pay
any dividends on, or make any other distributions in respect of, its capital
stock, (b) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (c) purchase, redeem or
otherwise acquire shares of its capital stock; (vi) issue, deliver or sell any
shares of its capital stock or any other voting securities or any securities
convertible into any such shares, voting securities or convertible securities or
any other securities (except for issuances upon exercise of Company stock
options); (vii) amend the Certificate of Incorporation, by-laws or equivalent
organizational documents of the Company or any material subsidiary; (viii)
acquire or dispose of any interest in any corporation, partnership, other
business organization or division thereof or any asset, except for acquisition
or disposition of assets consistent with past practices and acquisitions or
dispositions for consideration which is not, individually, in excess of
$2,500,000 and in the aggregate, in excess of $5,000,000; (ix) settle or
compromise any shareholder derivative suit or any other litigation arising from
the transactions contemplated by the Recapitalization Agreement or settle, pay
or compromise any claims not required to be paid, individually in an amount in
excess of $50,000, or in the aggregate in the excess of $250,000; (x) take any
action, other than reasonable and usual actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
and procedures; (xi) make any tax election or settle or compromise any material
tax liability; (xii) take any action that would result in (a) any of the
representations or warranties of the Company becoming untrue or (b) any of such
representations or warranties becoming untrue in any material respect or (c) any
of the conditions to the Merger not being satisfied; or (xiii) authorize to
enter into any agreement to do any of the above.
 
ACCESS TO INFORMATION

 
     The Company has agreed in the Recapitalization Agreement that, until the
Effective Time, it will, and will cause its subsidiaries to, give PX Holding and
its respective officers, employees, counsel, advisors, representatives and
representatives of financing sources identified by PX Holding (the
'Representatives') reasonable access to the offices and other facilities and to
the books and records of the Company and its subsidiaries. Such information will
be held in confidence in accordance with the provisions of the Confidentiality
Agreement.
 
STOCK PURCHASE
 
     Immediately prior to the consummation of the Merger, PX Holding will
purchase (the 'Stock Purchase') from the Company the Designated Number of Common
Shares (as defined below) for the Designated Per Share Purchase Price (as
defined below); provided, that all conditions to the Merger contained in the
Recapitalization Agreement have been either satisfied or waived.
 
                                       56

<PAGE>

     The Designated Per Share Purchase Price means the number obtained by
dividing (x) the sum of (A) the number of Panavision Common Stock converted by
the public stockholders multiplied by $27.00, (B) the number of Company stock
options cashed out multiplied by $27.00, and (C) 100 times the number of
redeemable preferred shares to be exchanged for cash multiplied by $26.50, by
(y) the sum of (A) the number of Panavision Common Stock converted by the
Holders, (B) the number Company stock options cashed out, and (C) 100 times the
number of redeemable preferred shares to be exchanged for cash.
 
     The Designated Number of Common Shares means such number of Panavision
Common Stock which, when added to the number of shares retained by the public
stockholders and the number of Panavision Common Stock retained by Warburg,
results in a number of Panavision Common Stock which, when multiplied by the
Designated Per Share Purchase Price, equals $215,000,000.
 
EFFORTS
 
     Each of the Company, PX Holding and Merger Sub have agreed to make all
necessary filings with governmental entities as promptly as practicable to
facilitate prompt consummation of the Merger, and to use its reasonable best
efforts and will cooperate with the other party to obtain all necessary waivers,
consents and approvals from governmental entities and make all necessary
registrations and filings, and take all reasonable steps as may be necessary to
obtain an approval or waivers from, or to avoid an action or proceeding by, any
governmental entity.
 
     PX Holding has agreed to use its reasonable best efforts to conclude any
financing necessary to consummate the transactions contemplated by the
Recapitalization Agreement. The Company has agreed to use its reasonable best
efforts to assist PX Holding in obtaining such financing.
 
PUBLIC ANNOUNCEMENTS

 
     The Company, on the one hand, and PX Holding and Merger Sub, on the other
hand, have agreed to consult promptly with each other prior to issuing any press
release or otherwise making any public statement with respect to the Merger, the
Stock Purchase and other transactions contemplated by the Recapitalization
Agreement.
 
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
 
     From and after the Effective Time, for a period of six years, PX Holding
shall, and shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of the
Company and its subsidiaries (the 'Indemnified Parties') from and against all
claims or liabilities related to actions or omissions or alleged actions or
omissions occurring at or prior to the Effective Time (i) to the full extent
permitted by Delaware law, and (ii) to the same extent and on the same terms and
conditions provided for in the Company's Amended and Restated Certificate of
Incorporation and By-Laws and agreements in effect at the date of the
Recapitalization Agreement.
 
     In addition, the Recapitalization Agreement provides that the Surviving
Corporation will maintain in effect for not less than four years from the
closing the current policies of the directors' and officers' liability insurance
maintained by the Company; provided that the Surviving Corporation may
substitute therefor other policies of at least the same coverage amounts and
which contain terms and conditions not less advantageous to the beneficiaries of
the current policies and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
closing; and, provided further, that the Surviving Corporation shall not be
required to pay an annual premium in excess of 200% of the last annual premium
paid by the Company prior to the date of the Recapitalization Agreement and if
the Surviving Corporation is unable to obtain the insurance required by this
clause, it shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount.
 
NO SOLICITATION
 
     Prior to the termination of the Recapitalization Agreement, the Company and
its affiliates will not, and will instruct their respective officers, directors,
employees, agents or other representatives (including without limitation, any
investment banker, attorney or accountant retained by the Company or its
subsidiaries) not to:
 
                                       57

<PAGE>

(i) solicit, initiate or encourage (including by way of furnishing non-public
information or assistance), or take any other action to facilitate, any
inquiries or to make any proposal which constitutes a proposal for a transaction
or may reasonably be expected to lead to a proposal for a Transaction Proposal
(as defined below); or (ii) enter into or participate in any discussions or
negotiations regarding a Transaction Proposal. By the terms of the
Recapitalization Agreement, the foregoing provision will not prohibit the

Company from (a) furnishing information to any person pursuant to a
confidentiality agreement on terms no less favorable to the Company than the
Confidentiality Agreement or engaging in discussions or negotiations with a
person that makes a Transaction Proposal, provided, that prior to taking such
action, the Board determines that such proposal is a Superior Proposal (as
defined below) and the Board notifies PX Holding of its intentions, (b) failing
to make or withdrawing or modifying its recommendation to the Company's
stockholders that they approve the Merger, after consultation with and based
upon the advice of independent legal counsel, determines in good faith that such
action is necessary for the Board to comply with its fiduciary duties, and (c)
disclosing to the Company's stockholders a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with respect to any tender offer,
or taking any other legally required action.
 
     'Transaction Proposal' means any bona fide inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of more
than 50% of the aggregate assets of the Company and its subsidiaries, taken as a
whole, or more than 50% of the voting power of the shares of Panavision Common
Stock then outstanding or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company, other than the transactions contemplated by the Recapitalization
Agreement.
 
     'Superior Proposal' means any proposal determined by the Board of Directors
of the Company in good faith, after consultation with outside counsel, to be a
bona fide proposal and made by a third party to acquire, directly or indirectly,
for consideration consisting of cash, property or securities, more than 50% of
the voting power of the shares of Panavision Common Stock then outstanding or
all or substantially all the assets of the Company and otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment,
after consultation with outside counsel and with a financial advisor of
nationally recognized reputation, to be more favorable to the Company's
stockholders than the Merger (taking into account all factors relating to such
proposal deemed relevant by the Company Board, including, without limitation,
the financing of such proposal and all other conditions to closing).
 
REDEEMABLE PREFERRED STOCK
 
     Until the closing, the Company will reserve 130,000 shares of Redeemable
Preferred Stock, free and clear of any lien or encumbrance thereon.
 
AFFILIATE LETTERS
 
     Prior to the closing date, the Company will deliver to PX Holding and
Merger Sub a letter identifying all persons who are, at the time the
Recapitalization Agreement is submitted for approval to the stockholders of the
Company, 'affiliates' of the Company for purposes of Rule 145 under the
Securities Act.
 
REPORTS
 
     The Company will provide PX Holding with monthly financial statements.
 
STOCKHOLDER MEETING

 
     The Company, in accordance with applicable law, will (i) call a meeting as
soon as practicable following the execution of the Recapitalization Agreement
and (ii) prepare and file with the Commission a preliminary proxy statement
relating to the Recapitalization Agreement.
 
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<PAGE>

EMPLOYEE BENEFIT ARRANGEMENTS
 
     As of the Effective Time, the Surviving Corporation will honor and satisfy
all obligations and liabilities with respect to the Plans (as defined in the
Recapitalization Agreement). For a period of eighteen months following the
Effective Time, the Surviving Corporation will continue the employee benefit
plans, programs and arrangements which are currently provided by the Company;
provided that notwithstanding anything in the Recapitalization Agreement to the
contrary, the Surviving Corporation shall not be required to maintain any
individual plan or program so long as the benefit plan and agreements maintained
by the Surviving Corporation are, in the aggregate, not materially less
favorable than those provided by the Company immediately prior to the date of
the Recapitalization Agreement.
 
CONDITIONS TO THE CONSUMMATION OF THE MERGER
 
     The respective obligations of PX Holding, Merger Sub and the Company to
consummate the Merger are subject to certain conditions, including the
following: (i) the requisite approval of the stockholders of the Company (the
'Stockholder Approval'); (ii) the Form S-4, of which this Proxy Statement
constitutes a part, shall have been declared effective by the Commission under
the Securities Act and not being the subject of any stop order or proceedings
seeking a stop order, and any material 'blue sky' and other state securities
laws applicable to the registration and qualification of shares of Panavision
Common Stock to be retained in the Merger shall have been complied with; (iii)
the receipt of a letter from an independent evaluation firm as to the solvency
of the Company and its subsidiaries, after giving effect to the transactions
contemplated by the Recapitalization Agreement; (iv) the absence of any order
given by a federal or state court or governmental or regulatory agency, or
preliminary or permanent injunction which would prevent the consummation of the
Merger or the Stock Purchase; (v) the absence of any federal or state rule or
regulation promulgated after the execution of the Recapitalization Agreement
which could result in any of the adverse consequences referred to in (iv) above;
(vi) the expiration or termination of the waiting periods, if any, applicable to
the transactions contemplated by the Recapitalization Agreement under the HSR
Act; and (vii) PX Holding shall have purchased and the Company shall have issued
and sold the shares of Panavision Common Stock as contemplated by the
Recapitalization Agreement.
 
     The obligations of PX Holding and Merger Sub to effect the Merger are
subject to certain additional conditions, including the following: (i) the truth
and correctness of the representations and warranties of the Company (without
giving effect to the materiality, material adverse effect or knowledge
qualifications contained therein) unless the failure of such representations and

warranties, individually or in the aggregate, to be true and correct would
result in a material adverse effect and the receipt by PX Holding of a
certificate from the appropriate officer of the Company to the foregoing effect;
(ii) the performance by the Company in all material respects of all of the
obligations required to be performed by it under the Recapitalization Agreement;
(iii) a lien on the Company's intellectual property granted in connection with a
credit agreement shall have been released; (iv) the absence of a material
adverse effect on the Company; and (v) Warburg shall have exchanged 88% of the
Panavision Common Stock it owned for Redeemable Preferred Stock of the Company;
and (vi) each of William C. Scott, John S. Farrand and Jeffrey J. Marcketta
shall have exercised, prior to January 1, 1998, a number of Company Stock
Options reasonably determined by the Company as the amount necessary such that,
after giving effect to such exercise, no amount paid in respect of such Company
Stock Option upon consummation of the Merger shall be subject to the excise tax
imposed under Section 4999 of the Code.
 
     Furthermore, the obligation of the Company to effect the Merger is subject
to certain additional conditions, including the following: (i) the truth and
correctness of the representations and warranties of PX Holding and Merger Sub
(without giving effect to the materiality, material adverse effect or knowledge
qualifications contained therein) unless the failure of such representations and
warranties, individually or in the aggregate, to be true and correct would
result in a material adverse effect and the receipt by the Company of a
certificate from the appropriate officers of PX Holding and Merger Sub to the
foregoing effect; and (ii) the performance by PX Holding and Merger Sub in all
material respects of all obligations required to be performed by it under the
Recapitalization Agreement.
 
                                       59

<PAGE>

TERMINATION; AMENDMENTS; WAIVER
 
     The Recapitalization Agreement and the transactions contemplated thereby
may be terminated at any time prior to the Effective Time, notwithstanding
approval of the stockholders of the Company, by: (i) the mutual written consent
of PX Holding and the Company, by action by their respective Boards of
Directors; (ii) PX Holding or the Company if the Merger shall not have been
consummated on or before the later of (a) April 30, 1998 and (b) 45 days after
the Commission has declared effective the Registration Statement (but in no
event later than June 30, 1998); provided, however, that neither PX Holding nor
the Company may terminate the Recapitalization Agreement if such party's failure
to perform any of its obligations under the Recapitalization Agreement results
in the failure of the transactions contemplated by the Recapitalization
Agreement to be consummated by such time; (iii) PX Holding or the Company if any
court or other governmental entity has issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable; (iv) the Company if, prior to the Closing, any person has
made a Transaction Proposal, provided, that PX Holding receives at least four
business days' prior written notice of such Transaction Proposal, and, during
such four business day period, the Company shall, and shall cause its financial
and legal advisors to, consider any adjustment in the terms and conditions of

the Recapitalization Agreement that PX Holding may propose (the 'Transaction
Proposal Termination Provision'); (v) PX Holding, if the Board of Directors
shall have (a) failed to recommend to the stockholders of the Company the
Stockholder Approval, (b) withdrawn or modified in a manner adverse to PX
Holding or Merger Sub its approval or recommendation of the Recapitalization
Agreement or the transactions contemplated thereby, (c) approved or recommended
a Transaction Proposal, or (d) resolved to effect any of the foregoing
(collectively, the 'Company Board Action Termination Provision'); or (vi) either
PX Holding or the Company, if the Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote upon a vote held
at a duly held meeting of stockholders or at any adjournment thereof (the
'Stockholder Approval Termination Provision').
 
     In the event of the termination of the Recapitalization Agreement pursuant
to any of the foregoing, such agreement shall become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders, other than the provisions with regard to the confidentiality of
information furnished pursuant to the Merger, termination and fees and expenses,
which shall survive any such termination.
 
     The Recapitalization Agreement may be amended by the Company, PX Holding
and Merger Sub at any time before or after any approval of the Recapitalization
Agreement by the stockholders of the Company but, after any such approval, no
amendment shall be made which decreases the consideration due to the Company's
stockholders pursuant to the Recapitalization Agreement or which adversely
affects the rights of the Company's stockholders thereunder without the approval
of such stockholders. The Recapitalization Agreement may not be amended except
by an instrument in writing signed on behalf of all the parties.
 
     At any time prior to the Effective Time, PX Holding, Merger Sub and the
Company may (i) extend the time for the performance of any of the obligations or
other acts of the other, (ii) waive any inaccuracies in the representations and
warranties contained therein of the other or in any document, certificate or
writing delivered pursuant thereto by the other or (iii) waive compliance by the
other with any of the agreements or conditions. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
 
FEES AND EXPENSES
 
     The parties shall bear their respective expenses incurred in connection
with the preparation, execution and performance of the Recapitalization
Agreement and the transactions contemplated thereby, whether or not the
transactions contemplated by the Recapitalization Agreement are consummated,
including, without limitation, all fees and expenses of their respective agents.
 
     The prevailing party in any legal action undertaken to enforce the
Recapitalization Agreement or any provision thereof shall be entitled to recover
from the other party the costs and expenses (including attorneys' and expert
witness fees) incurred in connection with such action.
 
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<PAGE>


         CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT WITH WARBURG
 
     The following description of the Stockholders Agreement is necessarily a
summary thereof and is therefore qualified in its entirety by reference to the
Stockholders Agreement, a copy of which is attached to this Proxy Statement as
Annex II and incorporated herein by reference. Stockholders of Panavision are
urged to read the Stockholders Agreement in its entirety.
 
REPRESENTATIONS AND WARRANTIES
 
     The Stockholders Agreement contains various representations and warranties
of Warburg relating to, among other things, the following matters (which
representations and warranties are subject, in certain cases, to specified
exceptions): (i) the ownership of certain shares of Panavision Common Stock;
(ii) the due authorization of Warburg to execute and deliver the Stockholders
Agreement and related matters; (iii) the absence of any conflicts with
organizational documents or contracts to which Warburg is a party and Warburg's
compliance with applicable law; and (iv) that Warburg currently has, and upon
the exercise of the options set forth below, shall sell, assign, transfer and
deliver to Mafco good, valid and marketable title to the Panavision Common
Stock.
 
     The Stockholders Agreement also contains various representations and
warranties of Mafco relating to, among other things, the following matters
(which representations and warranties are subject, in certain cases, to
specified exceptions): (i) the due organization and good standing of Mafco; (ii)
the due authorization, execution and delivery of the Stockholders Agreement and
related matters; and (iii) the absence of any conflicts with the organizational
documents or contracts to which Mafco is a party and Mafco's compliance with
applicable law.
 
OPTIONS
 
  Stock Option
 
     For a period of one year beginning on the first anniversary of the
Effective Time of the Merger and ending on the second anniversary of the
Effective Time of the Merger, Warburg may exercise its option to require Mafco
to purchase Warburg's remaining shares for $25.00 per share and Mafco may
exercise its option to require Warburg to sell its remaining shares to Mafco for
$30.00 per share. As a result of proration, other Holders may be required to
retain shares of Panavision Common Stock without being party to a similar
option.
 
     In the event that Holders of at least 88% of the shares of Panavision
Common Stock elect to receive cash for their shares, Warburg will exchange 88%
of its shares for Redeemable Preferred Stock and retain its remaining 1,526,040
shares of Panavision Common Stock. All of such remaining shares would be subject
to the Mafco Option and the Warburg Option. Under the Significant Share
Retention Alternative, Warburg will sell all of its shares in the Merger at
$26.50 per share, and, accordingly, no shares would be subject to such options.
 
THIRD PARTY BUSINESS COMBINATION; REMEDY

 
     If (i) the Recapitalization Agreement is terminated in accordance with the
Transaction Proposal Termination Provision, the Company Board Action Termination
Provision or the Stockholder Approval Termination Provision thereof, or (ii) the
Recapitalization Agreement shall have been amended to increase the amount of
Merger Consideration, and if Warburg receives any consideration (the
'Alternative Consideration') in connection with (A) a Transaction Proposal or
(B) an amended Recapitalization Agreement, Warburg will pay to Mafco: (x) if
pursuant to the Transaction Proposal Termination Provision, the Company Board
Action Termination Provision or the Stockholder Approval Termination Provision
of the Recapitalization Agreement and the Alternative Consideration is greater
than $26.50, but not greater than $30.00 per share, the excess of such
Alternative Consideration over $26.50 multiplied by the number of shares with
respect to which Warburg received such Alternative Consideration; (y) if
pursuant to the Transaction Proposal Termination Provision, the Company Board
Action Termination Provision or the Stockholder Approval Termination Provision
of the Recapitalization Agreement of the Recapitalization Agreement and the
Alternative Consideration is greater than $30.00 per share, the amounts payable
as described in (x) above plus one half the portion of Alternative Consideration
exceeding $30.00 per share; (z) if pursuant to an amended Recapitalization
Agreement, an amount equal to any and all Alternative Consideration above $26.50
per share.
 
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AGREEMENT TO VOTE; PROXY
 
     Warburg agreed to vote its shares of Panavision Common Stock, among other
things, for the Merger, and also granted to certain officers of Mafco an
irrevocable proxy with respect to such shares.
 
NO SOLICITATION
 
     Prior to the Termination Date (the earlier of (i) the Effective Time of the
Merger and (ii) the date the Recapitalization Agreement is terminated in
accordance with its terms), Warburg will not, directly or indirectly, solicit or
respond to any inquiries or the making of any proposal of any person or entity
with respect to the Company that constitutes or could reasonably be expected to
lead to an Alternative Transaction (as defined in the Stockholders Agreement);
provided, however, that the foregoing shall not restrict Warburg or any of its
representatives on the Board of Directors from taking actions to the same extent
and in the same circumstances permitted by the Board of Directors and the
Company under the Recapitalization Agreement. See 'CERTAIN PROVISIONS OF THE
RECAPITALIZATION AGREEMENT--No Solicitation.'
 
RESTRICTION ON TRANSFER
 
     Prior to the Termination Date, except pursuant to the terms of the
Recapitalization Agreement and the Stockholders Agreement, Warburg will not
transfer or offer to transfer any of its shares of Panavision Common Stock or
grant any proxies with respect to such shares.
 

REDEEMABLE PREFERRED STOCK
 
     To the extent that Holders of more than 88% of the shares of Panavision
Common Stock elect to receive cash for their shares, immediately prior to the
consummation of the Merger, Warburg will exchange 88% of its shares of
Panavision Common Stock for Redeemable Preferred Stock, which will be redeemed
immediately upon consummation of the Merger at a price equivalent to $26.50 in
cash per share of Panavision Common Stock. The conversion of Warburg's shares
into Redeemable Preferred Stock simply serves as a mechanism to allow Warburg to
receive as consideration in the Merger $.50 per share less than the Holders. To
the extent fewer than 88% of the Holders' shares of Panavision Common Stock are
exchanged for cash, Warburg will increase the number of shares of Panavision
Common Stock it exchanges for Redeemable Preferred Stock, up to the remainder of
its shares of Panavision Common Stock. However, the number of shares of
Panavision Common Stock to be exchanged by Warburg for Redeemable Preferred
Stock will be reduced by the number, if any, of Purchaser Stock Purchase Shares
(as defined below).
 
PURCHASER STOCK PURCHASE
 
     In connection with the Panavision Recapitalization, PX Holding intends to
purchase a $154 million equity interest in the Company. Pursuant to the
Recapitalization Agreement, if Holders of more than 2,271,420 shares of
Panavision Common Stock elect to retain such shares, PX Holding will not be able
to purchase a $154 million equity interest in the Company. In this circumstance,
Warburg will sell directly to PX Holding at $26.50 per share, in lieu of
exchanging for Redeemable Preferred Stock, a portion of its shares of Panavision
Common Stock (the 'Purchaser Stock Purchase Shares').
 
TAG-ALONG RIGHTS
 
     If, at any time on or prior to December 31, 1999, Mafco intends to sell, in
a single transaction or a series of related transactions, more than 25% of the
shares of Panavision Common Stock it beneficially owns other than (i) to any of
its affiliates who agree to be bound by the Stockholders Agreement, (ii)
pursuant to a public offering pursuant to an effective registration statement
under the Securities Act or (iii) pursuant to a merger or similar acquisition
transaction, in which all the shares of Panavision Common Stock are to be
acquired, Mafco shall notify all other Company stockholders, in writing, of such
proposed Sale and its terms and conditions. Within twenty business days of the
date of such notice, each such stockholder shall notify Mafco if it elects to
participate in such Sale. Any stockholder that fails to notify Mafco within such
twenty business day period will be deemed to have waived his or her rights. Each
stockholder that so notifies Mafco shall have the right to sell, at the same
price and on the same terms and conditions as Mafco, an amount of Panavision
Common Stock equal to the
 
                                       62

<PAGE>

number of Panavision Common Stock the third party actually proposes to purchase
multiplied by a fraction, the numerator of which shall be the number of shares
of Panavision Common Stock owned by such stockholder and the denominator of

which shall be the aggregate number of shares of Panavision Common Stock owned
by Mafco and each stockholder exercising his or her 'tag-along' rights.
 
INDEPENDENT DIRECTORS
 
     The Stockholders Agreement provides that from and after the Effective Time
of the Merger until the date on which the Company shall no longer have any
public stockholders, Mafco and the Company shall take all action within their
respective power to include on the Board two directors, each of whom is (i)
considered to be an independent director pursuant to the rules of the NYSE and
(ii) is not an officer or employee of any company affiliated with Mafco.
 
TERMINATION
 
     The Termination Date is the earlier of (i) the Effective Time of the Merger
and (ii) the date the Recapitalization Agreement is terminated in accordance
with its terms.
 
RESTRICTIONS ON TRANSFER
 
     During the period of time between (i) the Effective Time of the
Recapitalization Agreement and (ii) the expiration of the Option Period, Warburg
will not transfer or offer to transfer any or all of its shares of Panavision
Common Stock, except to certain affiliates.
 
                              REGULATORY APPROVALS
 
     The Merger is subject to the expiration or termination of the applicable
waiting period under the HSR Act. Certain aspects of the Merger will require
notification to, and filings with, certain securities and other authorities in
certain states, including jurisdictions where the Company currently operates.
 
ANTITRUST
 
     Under the HSR Act and the rules promulgated thereunder by the FTC, the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division and the
applicable waiting period has expired or been terminated. On February 4, 1998,
Warburg and Mr. Perelman filed Notification and Report Forms under the HSR Act
with the FTC and the Antitrust Division. By Letter dated February 13, 1998, the
FTC notified Warburg and Mr. Perelman that their request for early termination
of the waiting period under the HSR Act was granted effective as of such date.
At any time before or after consummation of the Merger, notwithstanding that
early termination of the waiting period under the HSR Act has been granted, the
Antitrust Division or the FTC could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin the consummation of the Merger or seeking divestiture of substantial
assets of the Company. At any time before or after the Effective Time, and
notwithstanding that early termination of the waiting period under the HSR Act
has been granted, any state could take such action under the antitrust laws as
it deems necessary or desirable in the public interest. Such action could
include seeking to enjoin the consummation of the Merger or seeking divestiture
of substantial assets of the Company. Private parties may also seek to take
legal action under the antitrust laws under certain circumstances.

 
     Based on information available to them, the Company and Merger Sub believe
that the Merger can be effected in compliance with federal and state antitrust
laws. However, there can be no assurance that a challenge to the consummation of
the Merger on antitrust grounds will not be made or that, if such a challenge
were made, the Company and Merger Sub would prevail or would not be required to
accept certain adverse conditions in order to consummate the Merger.
 
                        MERGER SUB, PX HOLDING AND MAFCO
 
     PX Holding, an indirect wholly owned subsidiary of Mafco, and Merger Sub, a
wholly owned subsidiary of PX Holding, were organized in connection with the
Merger and have not carried on any activities to date other than those incident
to their formation and transactions contemplated by the Recapitalization
Agreement and the Stockholders Agreement, respectively. The principal offices of
PX Holding and Merger Sub, are located at 35 East 62nd Street, New York, New
York 10021; telephone number (212) 527-8600.
 
                                       63

<PAGE>

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The following table sets forth, as of May 1, 1998, certain information
regarding the beneficial ownership of Panavision Common Stock by (i) each of the
Company's executive officers, (ii) each Director of the Company, (iii) each
nominee for election as a Director of the Company, (iv) each person who is known
to the Company to own beneficially more than 5% of the Common Stock and (v) all
officers and Directors of the Company as a group. Such information is based, in
part, upon information provided by certain stockholders of the Company. In the
case of persons other than the officers and Directors of the Company, such
information is based solely on a review of Schedules 13D and 13G filed with the
Commission. As of May 1, 1998 there were 45 holders of record of Panavision
Common Stock.
 
<TABLE>
<CAPTION>
                                                            PRIOR TO MERGER                        POST-MERGER(1)
                                                   ----------------------------------    ----------------------------------
                                                                          PERCENTAGE                            PERCENTAGE
                                                        NUMBER OF          OF SHARES          NUMBER OF          OF SHARES
                                                   SHARES BENEFICIALLY    BENEFICIALLY   SHARES BENEFICIALLY    BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER                   OWNED(2)(3)        OWNED(2)(4)         OWNED(2)           OWNED(2)
- ------------------------------------------------   -------------------    -----------    -------------------    -----------
<S>                                                <C>                    <C>            <C>                    <C>
Ronald O. Perelman(5)                                   
  35 East 62nd Street
  New York, New York 10021......................        12,717,000            67.2%            5,784,199            71.8%

Warburg, Pincus Capital Company, L.P.(6)                
  466 Lexington Avenue
  New York, New York 10017......................        12,717,000            67.2             1,526,040            18.9


William C. Scott                                         
  Panavision Inc.
  885 Third Avenue--Suite 3020
  New York, New York 10022......................         1,262,508             6.7               139,332             1.7

The Kaufmann Fund, Inc.                                  
  140 East 45th Street--43rd Floor
  New York, New York 10017......................         1,000,000             5.3               120,000             1.5

John S. Farrand.................................           702,600             3.7                84,312             1.0

Jeffrey J. Marcketta............................           268,430             1.4                30,276               *

Christopher M.R. Phillips.......................            15,601               *                    60               *

Sidney Lapidus(7)...............................        12,717,000            67.2             1,526,040            18.9

Martin D. Payson................................            11,200               *                    --              --

Willis G. Ryckman...............................             1,200              --                    --              --

Joanne R. Wenig.................................                --              --                    --              --

Howard Gittis...................................                --              --                    --              --

James R. Maher..................................                --              --                    --              --

Joseph P. Page..................................                --              --                    --              --

Kenneth Ziffren.................................                --              --                    --              --

All directors and executive officers as a group         14,978,539            79.1             7,564,219            93.9
  (8 persons)...................................
</TABLE>
 
     The foregoing persons have sole voting and investment power, unless
otherwise indicated below.
 
- ------------------
 
* Less than 1%.
 
(1) Assumes 88% of the shares of Panavision Common Stock are exchanged for cash.
 
(2) Except as otherwise indicated, the persons in this table have sole voting
    and investment power with respect to all shares of Panavision Common Stock
    shown as beneficially owned by them, subject to community property laws
    where applicable and subject to the information contained in the footnotes
    to this table. Mr. Scott has shared investment power with respect to 6,000
    shares of Panavision Common Stock.
 
                                              (Footnotes continued on next page)
 
                                       64


<PAGE>

(Footnotes continued from previous page)

(3) Amounts shown for each stockholder include all shares of Panavision Common
    Stock subject to stock options for 101,408, 0, 16,130, 15,101, 1,200 and
    1,200 shares of Panavision Common Stock granted to Messrs. Scott, Farrand,
    Marcketta, Phillips, Payson and Ryckman exercisable within 60 days. Not
    included are 265,273, 306,812, 103,184, 27,975, 4,800, 4,800 and 6,000
    shares of Panavision Common Stock subject to options granted to Messrs.
    Scott, Farrand, Marcketta Phillips, Payson and Ryckman and Ms. Wenig
    respectively, that would not be exercisable within 60 days, but for the
    consummation of the Merger.
 
(4) Based upon 18,928,500 shares of Panavision Common Stock outstanding as of
    December 31, 1997. Shares not outstanding but deemed beneficially owned by
    virtue of the right of a person or group to acquire them within 60 days are
    treated as outstanding only for purposes of determining the number of and
    percent owned by such person or group.
 
(5) All of the shares indicated as owned by Mr. Perelman are beneficially owned,
    pursuant to the Stockholders Agreement, by Mafco Holdings, a wholly owned
    subsidiary of Mr. Perelman, and accordingly, Mr. Perelman may be deemed to
    have beneficial ownership of such shares.
 
(6) The sole general partner of Warburg (together with its wholly owned
    subsidiaries, 'Warburg, Pincus') is Warburg, Pincus & Co., a New York
    general partnership ('WP'). E.M. Warburg, Pincus & Co., LLC, a New York
    limited liability company ('EMW LLC'), manages Warburg. The members of EMW
    LLC are substantially the same as the partners of WP. Lionel I. Pincus is
    the managing partner of WP and the managing member of EMW LLC and may be
    deemed to control both WP and EMW LLC. WP, as the sole general partner of
    Warburg, has a 20% interest in the profits of Warburg. Mr. Lapidus, a
    director of the Company, is a Managing Director and a member of EMW LLC and
    a general partner of WP. As such, Mr. Lapidus may be deemed to have an
    indirect pecuniary interest (within the meaning of the Exchange Act) in an
    indeterminate portion of the shares beneficially owned by Warburg and WP.
    See Note 7 below.
 
(7) All of the shares indicated as owned by Mr. Lapidus are owned by Warburg,
    Pincus and are included because of his affiliation with Warburg, Pincus. Mr.
    Lapidus disclaims 'beneficial ownership' of these shares within the meaning
    of Rule 13d-3 under the Securities Exchange Act of 1934. The address of Mr.
    Lapidus is c/o Warburg, Pincus Capital Company, L.P., 466 Lexington Avenue,
    New York, NY 10017.
 
                NOMINEES FOR ELECTION AS DIRECTORS OF PANAVISION
 
     Upon the consummation of the transactions contemplated by the
Recapitalization Agreement, PX Holding will have the right to designate all
members of the Company's Board of Directors. If the Recapitalization Agreement
is approved and adopted by the Panavision stockholders and the Merger is
consummated, all of the nominees, if elected, will become the directors of

Panavision immediately after the Effective Time and are expected to serve from
such time until the next succeeding annual meeting of stockholders. If the
Recapitalization Agreement is not approved, the Merger is not consummated or the
nominees are not elected at the Meeting, an annual meeting of stockholders for
1998 will be scheduled in the near future. Directors of the Company will be
elected by a plurality vote of the outstanding shares of Panavision Common Stock
present in person or represented by proxy at the Meeting. Under applicable
Delaware law, in tabulating the votes, abstentions from voting on the election
of Directors (including broker non-votes) will be disregarded and have no effect
on the outcome of the vote.
 
     The Board of Directors has been informed that all persons listed below are
willing to serve as Directors, but if any of them should decline or be unable to
act as a Director, the individuals named in the proxies will vote for the
election of such other person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any such nominees
will be unable or unwilling to serve.
 
     THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
 
                                       65

<PAGE>

NOMINEES FOR ELECTION AS DIRECTORS
 
     The name, age (as of May 1, 1998), principal occupation for the last five
years, selected biographical information and period of service as a Director of
the Company of each of the nominees for Director are set forth hereafter.
 
     Ronald O. Perelman (55) has been Chairman of the Board of Directors and
Chief Executive Officer of Mafco and various affiliates since 1980. Mr. Perelman
also is Chairman of the Executive Committees of the Boards of Directors of
Consolidated Cigar Holdings Inc. ('Cigar Holdings'), M&F Worldwide Corp.
('MFW'), The Coleman Company, Inc. ('Coleman'), Revlon, Inc. ('Revlon') and
Revlon Consumer Products Corporation ('Products Corporation') and Chairman of
the Board of Meridian Sports Incorporated ('Meridian'). Mr. Perelman is a
Director of the following corporations which file reports pursuant to the
Exchange Act: California Federal Bank, A Federal Savings Bank ('California
Federal'), CLN Holdings Inc. ('CLN'), Coleman, Coleman Worldwide Corporation
('Coleman Worldwide'), Cigar Holdings, First Nationwide Holdings Inc. ('FN
Holdings'), First Nationwide (Parent) Holdings Inc. ('FN Parent'), MFW,
Meridian, Products Corporation, Revlon and REV Holdings Inc. ('REV Holding').
(On December 27, 1996, Marvel Entertainment Group, Inc. ('Marvel'), Marvel
(Parent) Holdings Inc. ('Marvel Parent') and Marvel Holdings Inc. ('Marvel
Holding'), of which Mr. Perelman was a Director, Marvel III Holdings Inc., of
which Mr. Perelman is a director, and several subsidiaries of Marvel filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code.)
 
     William C. Scott (64) has been the Chairman and Chief Executive Officer of
the Company since 1988. From 1972 until 1987, Mr. Scott was President and Chief
Operating Officer of Western Pacific Industries Inc., a company listed on the

New York Stock Exchange. Prior to 1972, Mr. Scott was a Group Vice President of
Cordura Corporation (a business information company) for three years, a Vice
President of Booz Allen & Hamilton Inc. (management consulting firm) for five
years and an owner/operator of several small businesses for eight years. Mr.
Scott is also a director of Edison Control Corporation.
 
     John S. Farrand (53) has been the President and Chief Operating Officer of
the Company since 1985 and a director of the Company since October 1996. From
1980 to 1985, Mr. Farrand was employed by Warner Communications Inc. in several
senior executive positions. He was President of their Atari Coin-Operated Games
Division and subsequently was appointed President and Chief Operating Officer of
Atari Holdings, Inc. Prior to 1980, Mr. Farrand spent 14 years with Music Hire
Group Limited, a U.K. company specializing in coin-operated music systems (juke
boxes), and from 1973 to 1980 served as Managing Director. Mr. Farrand is a
member of the Academy of Motion Picture Arts and Sciences, a member of the
Society of Motion Picture and Television Engineers and an associate member of
the American Society of Cinematographers.
 
     Howard Gittis (64) has been Vice Chairman of Mafco and various of its
affiliates since 1985. Mr. Gittis is a Director of the following corporations
which file reports pursuant to the Exchange Act: California Federal, CLN, Cigar
Holdings, FN Holdings, FN Parent, MFW, Products Corporation, Revlon, REV
Holdings, Jones Apparel Group, Inc., Loral Space & Communications Ltd. and
Rutherford-Moran Oil Corporation.
 
     James R. Maher (48) has been President and Chief Executive Officer of Mafco
Consolidated Group, Inc. since 1995. Mr. Maher was Chairman of the Board of
Laboratory Corporation of America Holdings ('Lab Corp.'), a clinical laboratory
company, from 1995 to April 1996 and was President and Chief Executive Officer
of National Health Laboratories Holdings Inc., a clinical laboratory company and
a predecessor to Lab Corp, from 1992 to 1995. Mr. Maher was Vice Chairman of the
First Boston Corporation, an investment bank, from 1990 to 1992 and a Managing
Director of the First Boston Corporation from 1982 to 1990. Mr. Maher is a
Director of First Brands Corporation and MFW, which file reports pursuant to the
Exchange Act.
 
     Joseph P. Page (44) has been Executive Vice President and Chief Financial
Officer of Coleman since 1997 and was Executive Vice President and Chief
Financial Officer of New World Communications Group Inc. from 1994 to 1996.
Prior to that, Mr. Page was a partner in the accounting firm of Price Waterhouse
for more than five years.
 
     Martin D. Payson (62) has been a director of the Company since November
1996. Mr. Payson has been active in investment and philanthropic activities
since December 1992. From January 1990 to December 1992, he was Vice Chairman of
the Board of Directors of Time Warner, Inc., and from 1970 to December 1990, he
was an
 
                                       66

<PAGE>

executive officer of Warner Communications Inc. Mr. Payson is a director of
Bestform Group, Inc., Meridian, Delta Financial Corporation and Unapix

Entertainment, Inc.
 
     Kenneth Ziffren (57) has been a partner with the law firm of Ziffren,
Brittenham, Branca & Fischer since 1979. Mr. Ziffren is a director of City
National Corp.
 
BOARD COMMITTEES AND MEETINGS
 
     Messrs. Scott and Farrand, officers of the Company, and Mr. Lapidus receive
no remuneration for serving on the Board of Directors. Each of the other
independent Directors receive an annual fee of $20,000 and a meeting fee of
$1,000 for each of the Board of Directors or Committee meetings attended. All
directors will be reimbursed for out-of-pocket expenses. Under the Company's
First Amended and Restated Stock Option Plan, the Company may, from time to time
and in the sole discretion of the Board of Directors, grant options to
directors. During 1997, members of the Board of Directors received $69,000 in
directors' fees.
 
     During 1997, the Board of Directors met seven times and took actions by
unanimous written consent on other occasions.
 
     The Company has, as standing committees, an Audit Committee, a Stock Option
Committee and a Compensation Committee. The Company does not have a Nominating
Committee.
 
     The current members of the Audit Committee are Messrs. Payson and Ryckman.
The Audit Committee provides assistance to the Board of Directors with respect
to corporate accounting, reporting practices of the Company and the quality and
integrity of the financial reports of the Company. The Audit Committee
recommends to the Board of Directors the engagement of the independent auditors
of the Company and oversees audits and investigations of the business and
financial affairs of the Company, including, without limitation, any audits or
investigations which may be required by any governmental regulatory authority.
 
     The current members of the Stock Option Committee are Messrs. Payson and
Ryckman. The Stock Option Committee is the committee responsible for
administering the Stock Option Plan and has the authority to grant awards to
individuals pursuant to the Stock Option Plan, to determine the number of awards
to be so granted, the term of such awards, any vesting requirements and any
other administrative determinations required in connection therewith.
 
     The current members of the Compensation Committee are Messrs. Scott and
Lapidus and Ms. Wenig. The Compensation Committee provides assistance to the
Board of Directors to ensure that the Company's officers, key executives and
Directors are compensated in accordance with the Company's total compensation
objectives and executive compensation policies, strategies and pay levels
necessary to support organizational objectives.
 
     In 1997, the Audit Committee, Stock Option Committee and Compensation
Committee met following regularly scheduled meetings of the Board of Directors.
The Stock Option Committee and Audit Committee each took actions by unanimous
written consent.
 
     After the consummation of the Recapitalization, it is expected that the

Company's Board of Directors will act to appoint new members to the Audit, Stock
Option and Compensation committees.
 
EXECUTIVE OFFICERS
 
     The executive officers serve at the discretion of the Board of Directors.
The following table sets forth certain information concerning the executive
officers of the Company (as of May 1, 1998) who are expected to serve in such
capacity until the consummation of the Recapitalization (none of whom has a
family relationship with another executive officer):
 
<TABLE>
<CAPTION>
NAME                           AGE                           POSITION
- ----------------------------   ---   ---------------------------------------------------------
<S>                            <C>   <C>
William C. Scott............   64    Chairman of the Board and Chief Executive Officer
John S. Farrand.............   53    President and Chief Operating Officer
Jeffrey J. Marcketta........   43    Executive Vice President and Chief Financial Officer
Christopher M.R.
Phillips ...................   38    Controller and Secretary
</TABLE>
 
                                       67

<PAGE>

     William C. Scott has been the Chairman and Chief Executive Officer of the
Company since 1988. From 1972 until 1987, Mr. Scott was President and Chief
Operating Officer of Western Pacific Industries Inc., a company listed on the
New York Stock Exchange. Prior to 1972, Mr. Scott was a Group Vice President of
Cordura Corporation (a business information company) for three years, a Vice
President of Booz Allen & Hamilton Inc. (management consulting firm) for five
years and an owner/operator of several small businesses for eight years. Mr.
Scott is also a director of Edison Control Corporation.
 
     John S. Farrand has been the President and Chief Operating Officer of the
Company since 1985. From 1980 to 1985, Mr. Farrand was employed by Warner
Communications Inc. in several senior executive positions. He was President of
their Atari Coin-Operated Games Division and subsequently was appointed
President and Chief Operating Officer of Atari Holdings, Inc. Prior to 1980, Mr.
Farrand spent 14 years with Music Hire Group Limited, a U.K. company
specializing in coin-operated music systems (juke boxes), and from 1973 to 1980
served as Managing Director. Mr. Farrand is a member of the Academy of Motion
Picture Arts and Sciences, a member of the Society of Motion Picture and
Television Engineers and an associate member of the American Society of
Cinematographers.
 
     Jeffrey J. Marcketta has been Executive Vice President and Chief Financial
Officer of the Company since 1993 and Treasurer since 1996. From 1991 to 1993,
Mr. Marcketta served as the President of Panavision Europe Limited, a wholly
owned subsidiary of the Company, and was responsible for the general management
of the Company's European operations. From 1989 until 1991, he was Vice
President of Corporate Development, assisting the Chief Executive Officer in the

restructuring and rationalization of the Company's business operations. Prior to
joining the Company in 1989, he worked for Ernst & Young LLP for almost ten
years, the last three of which were spent in the Mergers and Acquisitions
Consulting Group of the New York office.
 
     Christopher M.R. Phillips has served as Controller of the Company since
1993 and Secretary since 1996. Mr. Phillips was the controller for the domestic
operations of the Company from 1989 to 1993 and the assistant controller for the
domestic operations of the Company from 1986 to 1989.
 
                                       68

<PAGE>

EXECUTIVE COMPENSATION
 
     The following table sets forth information regarding compensation paid to
or accrued by all the executive officers of the Company for each of the last
three completed fiscal years. Compensation accrued during one year and paid in
another is recorded under the year of accrual.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                                 LONG TERM
                                                                                            COMPENSATION AWARDS
                                                  ANNUAL COMPENSATION                  -----------------------------
                                     ----------------------------------------------    SECURITIES
                                                                       OTHER ANNUAL    UNDERLYING       ALL OTHER
NAME AND PRINCIPAL POSITION          YEAR     SALARY      BONUS(1)     COMPENSATION    OPTIONS(#)    COMPENSATION(3)
- ----------------------------------   ----    --------    ----------    ------------    ----------    ---------------
<S>                                  <C>     <C>         <C>           <C>             <C>           <C>
William C. Scott .................   1997    $800,000    $  400,000      $     --             --         $ 7,125
  Chairman of the Board and          1996     800,000       400,000            --        576,681           7,125
  Chief Executive Officer            1995     600,000     1,172,000            --             --           6,930

John S. Farrand ..................   1997    $600,000    $  300,000      $     --             --         $ 7,125
  President and Chief Operating      1996     600,000       359,400        54,163(2)     726,812           7,125
  Officer                            1995     400,000       785,000            --             --           6,930

Jeffrey J. Marcketta .............   1997    $240,423    $  180,317            --             --         $ 7,125
  Executive Vice President,          1996     228,846       201,335        27,081(2)     224,314           7,125
  Chief Financial Officer and        1995     218,769       314,000            --             --           6,930
  Treasurer

Christopher M. R. Phillips .......   1997    $111,058    $   51,577      $     --             --         $ 7,125
  Controller and Secretary           1996      99,615        24,904            --         43,076           6,504
                                     1995      88,077        45,000                           --           4,842
</TABLE>
 
- ------------------
(1) Bonuses are paid pursuant to the Company's Executive Incentive Compensation
Plan (the 'Executive Incentive Compensation Plan'), in which the Chairman and

Chief Executive Officer is eligible to participate, as well as any other
employees selected by the Chief Executive Officer. The plan allows participants
to earn bonuses up to a stated percentage of their base salary. The bonuses were
paid in part based on the Company's achievement of operating results, and in
part based on achievement of individual goals established for the participant.
Mr. Farrand's and Mr. Marcketta's 1996 bonus also reflects the issuance of
shares of Panavision Common Stock (the '1996 Recapitalization Stock') at the
time of the Company's 1996 Recapitalization, which shares at such time had a
fair market value of $59,400 and $29,700, respectively.
 
(2) Consists of tax reimbursement payments relating to the 1996 Recapitalization
Stock.
 
(3) Consists of matching contributions by the Company under its 401(k) plan.
 
OPTION GRANT TABLE
 
     No stock options were granted to any named executive officers during the
last fiscal year.
 
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
 
     The following table sets forth the number of shares as to which options
were exercised by Messrs. Scott, Farrand, Marcketta and Phillips during 1997,
the value realized upon such exercise, and the number and value of options held
by such persons as of December 31, 1997.
 
<TABLE>
<CAPTION>
                                                                       NUMBER OF SECURITIES              VALUE OF UNEXERCISED
                                                                      UNDERLYING UNEXERCISED             IN-THE-MONEY OPTIONS
                                     SHARES                            OPTIONS AT FY-END(#)                 AT FY-END($)(1)
                                   ACQUIRED ON        VALUE        -----------------------------     -----------------------------
NAME                               EXERCISE(#)      REALIZED       EXERCISABLE     UNEXERCISABLE     EXERCISABLE     UNEXERCISABLE
- -------------------------------    -----------     -----------     -----------     -------------     -----------     -------------
<S>                                <C>             <C>             <C>             <C>               <C>             <C>
William C. Scott...............      210,000       $ 5,216,925       101,408          265,273        $ 2,617,594      $ 6,847,359
John S. Farrand................      420,000       $10,533,850             0          306,812                  0        7,919,585
Jeffrey J. Marcketta...........      105,000       $ 2,608,463        16,130          103,184            416,356        2,663,437
Christopher M.R. Phillips......            0                 0        15,101           27,975            389,795          722,105
</TABLE>
 
- ------------------
(1) Based on a closing price of $25.8125 per share of Panavision Common Stock on
December 31, 1997.
 
                                       69

<PAGE>

MANAGEMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
 
     William C. Scott.  Pursuant to an employment agreement with the Company,

William C. Scott serves as Chairman of the Board of Directors and Chief
Executive Officer of the Company at an annual salary of $800,000, subject to
annual increases as determined by the Company. The employment agreement provides
that Mr. Scott shall be granted bonuses pursuant to the Executive Incentive
Compensation Plan and Non-Statutory Options pursuant to the terms of the Stock
Option Plan. The employment agreement expires on June 11, 1999. The Company may
terminate the employment agreement for cause. In the event of Mr. Scott's
voluntary termination (except during the six-month period commencing six months
after a change of control) or termination for cause by the Company, the Company
shall pay Mr. Scott only an amount equal to his annual base salary and all
previously unreimbursed expenses. Upon a voluntary termination by Mr. Scott
during such six-month period commencing six months after a change of control, or
upon termination of Mr. Scott's employment by the Company without good cause or
by Mr. Scott for good reason, Mr. Scott is entitled to the greater of (x)
$1,600,000 or (y) twice his annual base salary, and all accrued but previously
unpaid salary, bonuses and unreimbursed expenses through the date of
termination. Mr. Scott intends to terminate such contract prior to the Merger
and, accordingly, upon such termination will not be entitled to any payments
thereunder. Upon a termination of Mr. Scott by death or disability, the Company
shall make a lump sum payment equal to the greater of $800,000 or Mr. Scott's
base salary currently then in effect, as well as all accrued but previously
unpaid salary, bonuses and unreimbursed, expenses through the date of
termination.
 
     The employment agreement contains a covenant prohibiting the improper
disclosure and use of the Company's confidential information. In addition, the
employment agreement contains a covenant prohibiting Mr. Scott from directly or
indirectly competing with the Company. This covenant expires two years following
Mr. Scott's voluntary termination.
 
     John S. Farrand.  The Company has entered into an employment agreement with
Mr. Farrand pursuant to which he is entitled to receive, upon termination of his
employment by the Company (other than for cause or upon his death or
disability), severance payments equal to the greater of (i) $600,000 or (ii) his
annual base salary in effect at the time.
 
     Jeffrey J. Marcketta.  The Company has entered into an employment agreement
with Mr. Marcketta pursuant to which he is entitled to receive, upon termination
of his employment by the Company (other than for cause or upon his death or
disability), severance payments equal to the greater of (i) $237,500 or (ii) his
annual base salary in effect at the time.
 
     Messrs. Farrand and Marcketta intend to waive their rights to receive
severance payments upon termination of employment as described above prior to
the Effective Time.
 
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
 
     No officer or employee of the Company, other than Messrs. Scott and
Farrand, who serve on the Board of Directors of the Company, participated in the
deliberations of the Board of Directors of the Company concerning executive
compensation.
 

     The Stock Option Committee and the Compensation Committee were formed on
May 8, 1996, upon the consummation of the 1996 Recapitalization. Set forth below
is a description of the policies and practices that the Compensation Committee
will implement with respect to future compensation determinations.
 
     Compensation Philosophy.  The Company's compensation program is designed to
attract, reward and retain highly qualified executives and to encourage the
achievement of business objectives and superior corporate performance. The
program ensures the Board of Directors and stockholders that (1) the achievement
of the overall goals and objectives of the Company can be supported by adopting
an appropriate executive compensation policy and implementing it through an
effective total compensation program and (2) the total compensation program and
practices of the Company are designed with full consideration of all accounting,
tax, securities law and other regulatory requirements and are of the highest
quality.
 
     The Company's executive compensation program consists of two key elements:
(1) an annual compensation component composed of base salary and bonus, and (2)
a long-term compensation component composed of equity-based awards pursuant to
the Stock Option Plan.
 
                                       70

<PAGE>

     Annual Compensation.  Base salaries will be determined by evaluating the
responsibilities associated with the position being evaluated and the
individual's overall level of experience. In addition, the compensation of the
Chief Executive Officer determined by the Compensation Committee is subject to
the terms of Mr. Scott's existing employment agreement. Annual salary
adjustments will be determined by giving consideration to the Company's
performance and the individual's contribution to that performance.
 
     Bonuses are paid pursuant to the Company's Executive Incentive Compensation
Plan, in which the Chairman and Chief Executive Officer is eligible to
participate, as well as any other employees selected by the Chief Executive
Officer. The plan allows participants to earn bonuses up to a stated percentage
of their base salary. The bonuses are paid in part based on the Company's
achievement of operating results, and in part based on achievement of individual
goals established for the participant.
 
     With the exception of Mr. Phillips, all of the Company's named executive
officers are currently under employment contracts. See 'Management Contracts and
Change in Control Agreements.' The annual compensation for Messrs. Marcketta and
Phillips and the bonus portion of Mr. Scott's annual compensation will be based
upon the considerations noted above. Mr. Scott's base salary is determined
pursuant to his employment agreement.
 
     Long-term Compensation.  In order to align stockholder and executive
officer interests, the long-term component of the Company's executive
compensation program utilizes equity-based awards whose value is directly
related to the value of the Panavision Common Stock. These equity-based awards
will be granted by the Stock Option Committee pursuant to the Stock Option Plan.
Individuals to whom equity-based awards are to be granted and the amount of

Panavision Common Stock related to equity-based awards will be determined solely
at the discretion of the Stock Option Committee. Because individual equity-based
award levels will be based on a subjective evaluation of each individual's
overall past and expected future contribution, no specific formula is used to
determine such awards for any executive.
 
     Tax Deductibility of Executive Compensation.  Section 162(m) of the Code
limits the tax deductibility of compensation in excess of $1 million paid to
certain members of senior management, unless the payments are made under a
performance-based plan as defined in Section 162(m). The Company's general
policy is to structure its compensation programs to preserve the tax
deductibility of compensation paid to its executive officers and other members
of management. All compensation paid pursuant to the Stock Option Plan is
intended to be exempt from the application of Section 162(m). Although Messrs.
Scott's and Farrand's total annual salary and bonus in 1997 exceeded $1 million,
such amounts were exempt from the application of Section 162(m) because of
certain grandfather provisions and therefore are fully deductible by the
Company. While the Company currently intends to pursue a strategy of maximizing
deductibility of senior management compensation, it also believes it is
important to maintain the flexibility to take actions it considers to be in the
best interests of the Company and its stockholders, which may be based on
considerations in addition to Section 162(m).
 

COMPENSATION COMMITTEE             STOCK OPTION COMMITTEE
- -----------------------            -----------------------
   William C. Scott                   Martin D. Payson
    Sidney Lapidus                    Willis G. Ryckman
    Joanne R. Wenig

 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     During the last completed fiscal year, Messrs. Scott and Lapidus and Ms.
Wenig served as members of the Compensation Committee. Mr. Scott is Chief
Executive Officer of the Company.
 
                      COMPARATIVE STOCK PERFORMANCE GRAPH
 
     The graph below compares the total cumulative return of the Panavision
Common Stock from November 21, 1996 (the date trading of the Panavision Common
Stock commenced) through December 31, 1997, to the Standard & Poor's 500 Index
and the Russell 2000 Index. The graph assumes that dividends were reinvested and
is based on an investment of $100 on November 20, 1996.
 
                                       71

<PAGE>

                                   [CHART]
 
<TABLE>
<CAPTION>
                                                    CUMULATIVE TOTAL RETURN

                                                --------------------------------
                                                11/20/96    12/31/96    12/31/97
                                                --------    --------    --------
<S>                                             <C>         <C>         <C>
Panavision Inc.................................   $100      $ 122.06    $ 151.84
Standard & Poor's 500 Index....................    100         99.57      130.23
Russell 2000...................................    100        104.34      125.75
</TABLE>
 
                     CERTAIN RELATIONSHIPS AND TRANSACTIONS
 
     In May 1996, the Company effected a recapitalization, pursuant to which it
acquired all of the equity interests in PILP it did not previously own and
retired all of PILP's outstanding debt securities for a total of $126.1 million
in cash (the 'PILP Recapitalization'). As part of the PILP Recapitalization:
 
          (i) Warburg, Pincus and Messrs. Scott, Farrand and Marcketta
     contributed $11,608,000, $580,400, $165,829 and $82,914, respectively, to
     the Company for subordinated demand notes which had an interest rate of
     6.83% per annum and ranked pari passu with each other. The notes to Messrs.
     Scott, Farrand and Marcketta were issued on May 8, 1996. The notes to
     Warburg, Pincus were issued on May 8, July 16, and July 31, 1996. Mr.
     Lapidus is a Managing Director of Warburg, Pincus which holds 67.2% of the
     shares of Panavision Common Stock;
 
          (ii) Mr. Scott exchanged his interests in PILP for 989,100 shares of
     Panavision Common Stock;
 
          (iii) Messrs. Farrand and Marcketta were issued 282,600 and 141,300
     shares of Panavision Common Stock, respectively; and
 
          (iv) the Company, Warburg, Pincus and Messrs. Scott, Farrand and
     Marcketta entered into an Amended and Restated Stockholders Agreement dated
     June 12, 1996 (the 'PILP Stockholder Agreement'), pursuant to which the
     parties have agreed to cause the Board of Directors to include (i) three
     persons designated by Warburg, Pincus, (ii) William C. Scott or, if he is
     not an employee of the Company or is otherwise unavailable, one person
     designated by the holders of a majority of the shares of Panavision Common
     Stock held by management who are then employed by the Company and (iii)
     John S. Farrand or, if he is not an employee of the Company or is otherwise
     unavailable, one person designated by the holders of a majority of the
     shares of Panavision Common Stock held by management who are then employed
     by the Company. The PILP Stockholders Agreement imposes certain
     restrictions on the transfer of shares of Panavision Common Stock by the
     management stockholders prior to the second anniversary of the initial
     public offering. The PILP Stockholders Agreement also provides such
     stockholders with certain registration rights. The PILP Stockholders
     Agreement terminates on the date when Warburg, Pincus and its affiliates
     beneficially own less than 5% of the outstanding shares of Panavision
     Common Stock.
 
                                       72

<PAGE>


     Effective July 1, 1996, Warburg, Pincus acquired substantially all of the
assets of Lee Lighting Limited for approximately $8.0 million and contributed
those assets to the Company. The purchase price equaled the book value of the
acquired assets.
 
     Mr. Farrand, an executive officer of the Company, is the obligor in respect
of a promissory demand note issued to the Company in January 1987. The principal
amount of and accrued interest on this note were $540,000 and $38,681,
respectively, as of December 31, 1997. The note accrues interest at a rate of
7.04% per annum, and, as of December 31, 1997, no payments of principal had been
made. This note was originally issued in connection with Mr. Farrand's purchase
of a residence and is secured by a portion of Mr. Farrand's Panavision Common
Stock and options therefor.
 
     In December 1997, in order to facilitate the payment of taxes related to
the exercise of options issued pursuant to the Panavision Stock Option Plan, the
Company made advances to certain officers and key employees in the form of
notes. Notes were issued by Messrs. Scott, Farrand and Marcketta in the amount
of $2,152,503, $3,698,800 and $924,700, respectively. The notes are recourse
obligations and mature on the earlier of December 24, 2000 or the date of
consummation of the Panavision Recapitalization. Interest on the notes is
compounded semiannually at the applicable federal rate in effect on the date the
notes were issued.
 
     Certain executive management services have been provided by the Company to
Lee International, Inc. ('LII'), an indirect, wholly owned subsidiary of
Warburg, Pincus. The amount received by the Company from LII was $996,000,
$854,000, $687,000 and $510,000 for the years ended December 31, 1993, 1994,
1995 and 1996, respectively. The amounts received have been offset against
selling, general and administrative expenses in the Company's consolidated
statement of income. The agreement with LII expired on September 30, 1996.
 
      COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
     The Company's executive officers, directors and ten percent stockholders
are required under Section 16(a) of the Exchange Act, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Commission and
the New York Stock Exchange. Copies of these reports must also be furnished to
the Company. Based solely upon its review of copies of such reports furnished to
the Company through the date hereof, or written representations that no reports
were required to be filed, the Company believes that during the fiscal year
ended December 31, 1997, all filing requirements applicable to its officers,
directors and ten percent stockholders were complied with in a timely manner,
except for Form 4s filed in connection with the exercise of options in December
1997 by Messrs. Scott, Farrand, Marcketta, Harvey, Hezzlewood and Neil, which
were filed 23 days late, and a Form 4 disclosing the sale of 1,100 shares of
Panavision Common Stock by Mr. Hezzlewood, which was filed four months late.
 
              RATIFICATION OF SELECTION OF THE COMPANY'S AUDITORS
 
     The Audit Committee and the Board of Directors of the Company has appointed
Ernst & Young LLP as the Company's independent auditors for the fiscal year
ending December 31, 1998. Although stockholder action on this matter is not

required, this appointment is being recommended to the stockholders for
ratification. Pursuant to applicable Delaware law, the ratification of the
selection of Ernst & Young LLP requires the affirmative vote of the holders of a
majority of the votes cast at the Meeting, in person or by proxy, and entitled
to vote. Abstentions and broker non-votes will be counted and will have the same
effect as a vote against the proposal.
 
     Ernst & Young LLP representatives will be present at the Meeting and will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
 
     THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR 1998.
 
                                 LEGAL OPINIONS
 
     The legality of Panavision Common Stock being retained in the Merger and
certain federal income tax consequences of the Merger are being passed on by
Willkie Farr & Gallagher, New York, New York, special counsel to the Company.
See 'THE MERGER--Certain Federal Income Tax Consequences.'
 
                                       73

<PAGE>

                                    EXPERTS
 
     The consolidated financial statements of the Company appearing in its
Annual Report on Form 10-K for the year ended December 31, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
 
     Representatives of Ernst & Young LLP are expected to be present at the
Meeting, where they will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
 
                    INCORPORATION OF DOCUMENTS BY REFERENCE
 
     Panavision hereby incorporates by reference into this Proxy Statement the
following documents previously filed with the Commission pursuant to the
Exchange Act:
 
          (1) The Company's Annual Report on Form 10-K for the fiscal year ended
     December 31, 1997, as amended by Amendment No. 1 thereto on Form 10-K/A
     filed with the Commission on April 28, 1998; and
 
          (2) The Company's Registration Statement on Form 8-A as filed with the
     Commission on October 31, 1996, as amended by Amendment No. 1 thereto on
     Form 8-A/A-1 filed with the Commission on November 20, 1996.
 
     In addition, all reports and other documents filed by Panavision pursuant

to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the Panavision Meeting shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such reports
and documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein, or in any other subsequently filed document that also is incorporated or
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement.
 
     THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE FILED BY
PANAVISION WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN) ARE AVAILABLE, WITHOUT CHARGE, UPON WRITTEN OR
ORAL REQUEST FROM ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY
STATEMENT IS DELIVERED, FROM PANAVISION INC., 6219 DE SOTO AVENUE, WOODLAND
HILLS, CALIFORNIA 91367, ATTENTION: SECRETARY. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 31, 1998.
 
                             STOCKHOLDER PROPOSALS
 
     Management of the Company knows of no other matters that may properly be,
or which are likely to be, brought before the Meeting. However, if any other
matters are properly brought before such Meeting, the persons named in the
enclosed Proxy or their substitutes intend to vote the Proxies in accordance
with their judgment with respect to such matters, unless authority to do so is
withheld in the Proxy.
 
     Stockholder proposals intended to be presented at the Company's 1999 Annual
Meeting must be received by the Company not later than November 30, 1998 for
inclusion in the proxy materials for such meeting. Such proposals should be sent
by Certified Mail--Return Receipt Requested to the attention of the Secretary of
the Company, Panavision Inc., 6219 De Soto Avenue, Woodland Hills, California
91367. Under the rules of the Commission, a stockholder submitting a proposal is
required to be a record or beneficial owner of at least 1% or $1,000 in market
value of Panavision Common Stock for at least one year prior to the date of
submission of the proposal, and he or she must continue to own such securities
through the date on which the meeting is held.
 
                                       74

<PAGE>

                             INDEX OF DEFINED TERMS
 
<TABLE>
<S>                                                                                                             <C>
1996 Recapitalization Stock..................................................................................    69
ABR Loans....................................................................................................    46
Aggregate Consideration......................................................................................    10
Alternative Consideration....................................................................................    61
Antitrust Division...........................................................................................    11
Board........................................................................................................     1
Board of Directors...........................................................................................     1
California Federal...........................................................................................    66
Cash Election Number.........................................................................................    10
Cash Election Shares.........................................................................................    10
Cash Price...................................................................................................    38
Chase........................................................................................................    46
Cigar Holdings...............................................................................................    66
CLN..........................................................................................................    66
Closing Date.................................................................................................    46
Code.........................................................................................................    42
Coleman......................................................................................................    66
Coleman Worldwide............................................................................................    66
Commission...................................................................................................     6
Company......................................................................................................     1
Company Board Action Termination Provision...................................................................    60
Company Stock Option.........................................................................................    12
Confidentiality Agreement....................................................................................    30
Credit Facilities............................................................................................    46
Designated Number of Common Shares...........................................................................    41
Designated Per Share Purchase Price..........................................................................    41
DGCL.........................................................................................................     2
EBIT.........................................................................................................    36
EBITDA.......................................................................................................    35
Effective Time...............................................................................................     7
Election.....................................................................................................    10
Election Date................................................................................................    10
EMW LLC......................................................................................................    65
Engagement Letter............................................................................................    37
ERISA........................................................................................................    55
Eurodollar Loans.............................................................................................    46
Exchange Act.................................................................................................     6
Exchange Agent...............................................................................................    10
Executive Incentive Compensation Plan........................................................................    69
Film Services Group..........................................................................................    19
FN Holdings..................................................................................................    66
FN Parent....................................................................................................    66
Form of Election.............................................................................................    10
FSG..........................................................................................................    19
FSG Acquisition..............................................................................................    19
FTC..........................................................................................................    11
Goldman Sachs................................................................................................     3
Guarantors...................................................................................................    47

Holder.......................................................................................................     1
HSR Act......................................................................................................    11
Indemnified Parties..........................................................................................    57
Indenture....................................................................................................    45
</TABLE>
 
                                       i

<PAGE>

<TABLE>
<S>                                                                                                             <C>
IRS..........................................................................................................    42
Lab Corp.....................................................................................................    66
Lee Lighting.................................................................................................    26
LII..........................................................................................................    73
LTM..........................................................................................................    35
LTM EBITDA Multiple..........................................................................................    35
Mafco........................................................................................................     1
Mafco Option.................................................................................................    14
Marvel.......................................................................................................    66
Marvel Holding...............................................................................................    66
Marvel Parent................................................................................................    66
Meeting......................................................................................................     1
Merger.......................................................................................................     1
Merger Sub...................................................................................................     1
Meridian.....................................................................................................    66
MFW..........................................................................................................    66
Murray Devine................................................................................................    47
New Credit Agreement.........................................................................................    46
Non-Cash Election Shares.....................................................................................    10
Notes........................................................................................................    22
NYSE.........................................................................................................     3
Offering.....................................................................................................    45
Option Period................................................................................................    14
Panavision...................................................................................................     1
Panavision Assumption........................................................................................    45
Panavision Common Stock......................................................................................     1
Panavision Recapitalization..................................................................................     1
PILP.........................................................................................................    72
PILP Recapitalization........................................................................................    72
PILP Stockholder Agreement...................................................................................    72
Private Transactions.........................................................................................    35
Products Corporation.........................................................................................    66
Proxy........................................................................................................     3
Proxy Statement..............................................................................................     1
Public Transactions..........................................................................................    35
Purchaser Stock Purchase Shares..............................................................................    62
PX Escrow....................................................................................................    45
PX Holding...................................................................................................     1
PX Holding Stock Purchase....................................................................................    27
Recapitalization Agreement...................................................................................     1
Recapitalization Financings..................................................................................     2
Recapitalization Transactions................................................................................    35

Record Date..................................................................................................     2
Redeemable Preferred Stock...................................................................................     1
Registration Agreement.......................................................................................    45
Registration Statement.......................................................................................     6
Representatives..............................................................................................    56
REV Holding..................................................................................................    66
Revlon.......................................................................................................    66
Revolving Facility...........................................................................................    46
Sale.........................................................................................................    15
Securities Act...............................................................................................     2
Significant Share Retention Alternative......................................................................     2
Solvency Opinion.............................................................................................    47
</TABLE>
 
                                       ii

<PAGE>

<TABLE>
<S>                                                                                                             <C>
Stock Purchase...............................................................................................    56
Stockholder Approval.........................................................................................    59
Stockholder Approval Termination Provision...................................................................    60
Stockholders Agreement.......................................................................................     1
Superior Proposal............................................................................................    58
Surviving Corporation........................................................................................    54
Term Facility................................................................................................    46
Tranche A Term Facility......................................................................................    46
Tranche B Term Facility......................................................................................    46
Transactions.................................................................................................    49
Transaction Proposal.........................................................................................    58
Transaction Proposal Termination Provision...................................................................    60
Warburg......................................................................................................     1
Warburg Option...............................................................................................    12
Warburg Option Shares........................................................................................    14
Warburg, Pincus..............................................................................................    65
Willkie Farr.................................................................................................    30
WP...........................................................................................................    65
</TABLE>
 
                                      iii

<PAGE>

                                    ANNEX I


<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                    AGREEMENT OF RECAPITALIZATION AND MERGER
 
                                  BY AND AMONG
 
                            PX HOLDING CORPORATION,
                             PX MERGER CORPORATION
                                      AND
                                PANAVISION INC.
 
                         DATED AS OF DECEMBER 18, 1997
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
 
                                                   ARTICLE I
                                                  THE MERGER
<S>            <C>                                                                                         <C>
SECTION 1.1    The Merger...............................................................................      1
SECTION 1.2    Effective Time...........................................................................      1
SECTION 1.3    Effects of the Merger....................................................................      1
SECTION 1.4    Certificate of Incorporation and By-Laws of the Surviving Corporation....................      2
SECTION 1.5    Directors and Officers...................................................................      2
SECTION 1.6    Closing..................................................................................      2
 
                                                  ARTICLE II
                                   EFFECT OF THE MERGER ON THE CAPITAL STOCK
                                        OF THE CONSTITUENT CORPORATIONS
SECTION 2.1    Effect on Capital Stock..................................................................      2
SECTION 2.2    Proration................................................................................      3
SECTION 2.3    Election Procedures......................................................................      3
SECTION 2.4    Options; Stock Plans.....................................................................      4
SECTION 2.5    Exchange and Retention of Common Shares..................................................      4
 
                                                  ARTICLE III
                                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1    Organization and Qualification; Subsidiaries.............................................      5
SECTION 3.2    Capitalization; Subsidiaries.............................................................      5
SECTION 3.3    The Purchased Shares.....................................................................      6
SECTION 3.4    Authority Relative to this Agreement.....................................................      6
SECTION 3.5    No Violation; Required Filings and Consents..............................................      6
SECTION 3.6    SEC Reports and Financial Statements.....................................................      7
SECTION 3.7    No Undisclosed Liabilities...............................................................      8
SECTION 3.8    Litigation...............................................................................      8
SECTION 3.9    Properties and Assets; Real Property and Leases..........................................      8
SECTION 3.10   Insurance................................................................................      9
SECTION 3.11   Information..............................................................................      9
SECTION 3.12   Employee Benefit Plans...................................................................      9
SECTION 3.13   Taxes....................................................................................     10
SECTION 3.14   Environmental Matters....................................................................     12
SECTION 3.15   Absence of Certain Changes...............................................................     14
SECTION 3.16   Broker...................................................................................     14
SECTION 3.17   Opinion of Investment Banker.............................................................     14
SECTION 3.18   Board Recommendation.....................................................................     14
SECTION 3.19   Required Company Vote....................................................................     14
SECTION 3.20   Intellectual Property....................................................................     14
SECTION 3.21   Related Party Transactions...............................................................     16
SECTION 3.22   Labor Relations and Employment...........................................................     16
 
                                                  ARTICLE IV
                                        REPRESENTATIONS AND WARRANTIES

                                          OF PURCHASER AND MERGER SUB
SECTION 4.1    Organization and Qualification...........................................................     17
SECTION 4.2    Authority Relative to this Agreement.....................................................     17
SECTION 4.3    Capitalization of Merger Sub; Interests in the Company...................................     17
SECTION 4.4    No Violation.............................................................................     17
</TABLE>
 
                                       i

<PAGE>

<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
<S>            <C>                                                                                         <C>
SECTION 4.5    Information..............................................................................     18
SECTION 4.6    No Prior Business........................................................................     18
SECTION 4.7    No Distribution..........................................................................     18
SECTION 4.8    Broker...................................................................................     18
 
                                                   ARTICLE V
                                                   COVENANTS
SECTION 5.1    Conduct of Business of the Company.......................................................     18
SECTION 5.2    Access to Information; Confidentiality...................................................     19
SECTION 5.3    Financing................................................................................     20
SECTION 5.4    Stock Purchase...........................................................................     20
SECTION 5.5    Efforts..................................................................................     20
SECTION 5.6    Public Announcements.....................................................................     21
SECTION 5.7    Indemnification; Directors' and Officers' Insurance......................................     21
SECTION 5.8    Notification of Certain Matters..........................................................     22
SECTION 5.9    No Solicitation..........................................................................     22
SECTION 5.10   Redeemable Preferred Stock...............................................................     23
SECTION 5.11   Affiliate Letters........................................................................     23
SECTION 5.12   Reports..................................................................................     23
SECTION 5.13   Stockholders Meeting.....................................................................     23
SECTION 5.14   Employee Benefits........................................................................     24
SECTION 5.15   Other Actions............................................................................     24
 
                                                  ARTICLE VI
                                   CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1    Conditions to the Obligations of Both Parties............................................     24
SECTION 6.2    Conditions to the Obligations of Purchaser and Merger Sub................................     25
SECTION 6.3    Conditions to the Obligations of the Company.............................................     26
 
                                                  ARTICLE VII
                                        TERMINATION; AMENDMENT; WAIVER
SECTION 7.1    Termination..............................................................................     26
SECTION 7.2    Effect of Termination....................................................................     27
SECTION 7.3    Fees and Expenses........................................................................     27
SECTION 7.4    Amendment................................................................................     27
SECTION 7.5    Extension; Waiver........................................................................     27
 
                                                 ARTICLE VIII

                                                 MISCELLANEOUS
SECTION 8.1    Non-Survival of Representations and Warranties...........................................     27
SECTION 8.2    Entire Agreement; Assignment.............................................................     27
SECTION 8.3    Validity.................................................................................     27
SECTION 8.4    Notices..................................................................................     28
SECTION 8.5    Governing Law............................................................................     28
SECTION 8.6    Descriptive Headings.....................................................................     28
SECTION 8.7    Counterparts.............................................................................     28
SECTION 8.8    Parties in Interest......................................................................     28
SECTION 8.9    Certain Definitions......................................................................     29
SECTION 8.10   Specific Performance.....................................................................     29
</TABLE>
 
                                       ii

<PAGE>

                             INDEX OF DEFINED TERMS
 
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
Affiliate..................................................................................................    29
Agreement..................................................................................................     1
Amended and Restated Certificate of Incorporation..........................................................     2
Business...................................................................................................    13
Cash Consideration.........................................................................................     2
Cash Election Number.......................................................................................     3
Cash Election Shares.......................................................................................     2
Cashed Shares..............................................................................................     4
Certificates...............................................................................................     4
Closing....................................................................................................     2
Closing Date...............................................................................................     2
Code.......................................................................................................     9
Common Shares..............................................................................................     1
Company....................................................................................................     1
Company Board..............................................................................................     1
Company Financial Statements...............................................................................     7
Company SEC Reports........................................................................................     7
Company Stock Option.......................................................................................     4
Company Stockholder Approval...............................................................................     1
Confidentiality Agreement..................................................................................    20
Contract...................................................................................................     7
DGCL.......................................................................................................     1
Effective Time.............................................................................................     1
Election Date..............................................................................................     3
Environmental Laws.........................................................................................    13
Environmental Liabilities and Costs........................................................................    13
Environmental Permits......................................................................................    13
ERISA......................................................................................................     9
ERISA Affiliate............................................................................................     9
Exchange Act...............................................................................................     7
Exchange Agent.............................................................................................     3
Exchange Fund..............................................................................................     4
Form of Election...........................................................................................     3
Governmental Entity........................................................................................     7
Hazardous Substances.......................................................................................    13
HSR Act....................................................................................................     7
Indemnified Parties........................................................................................    21
Intellectual Property......................................................................................    15
Laws.......................................................................................................    13
License Agreements.........................................................................................    16
Liens......................................................................................................     8
Losses.....................................................................................................    13
Material Adverse Effect on Purchaser or Merger Sub.........................................................    17
Material Adverse Effect on the Company.....................................................................     5
Merger.....................................................................................................     1

Merger Consideration.......................................................................................     3
Merger Sub.................................................................................................     1
Merger Sub Common Stock....................................................................................     2
NYSE.......................................................................................................     3
Other Filings..............................................................................................     9
Patents....................................................................................................    15
</TABLE>
 
                                      iii

<PAGE>

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
Permitted Liens............................................................................................     8
Person.....................................................................................................    29
Plans......................................................................................................     9
Preferred Stock............................................................................................     5
Proration Factor...........................................................................................     3
Proxy Statement............................................................................................     9
Purchaser..................................................................................................     1
Release....................................................................................................    13
Remedial Action............................................................................................    14
Representatives............................................................................................    19
Retained Common Shares.....................................................................................     3
SEC........................................................................................................     3
Securities Act.............................................................................................     7
Software...................................................................................................    16
Special Meeting............................................................................................     9
Stock Purchase.............................................................................................     1
Stockholder................................................................................................     3
Stockholder Approval.......................................................................................    24
Subsidiaries...............................................................................................    29
Subsidiary.................................................................................................    29
Surviving Corporation......................................................................................     1
Tax Return.................................................................................................    12
Taxes......................................................................................................    12
Technology.................................................................................................    16
Trademarks.................................................................................................    15
TSCA.......................................................................................................    13
U.S. GAAP..................................................................................................     7
Voting Debt................................................................................................     5
WARN.......................................................................................................    16
</TABLE>
 
                                       iv

<PAGE>

                    AGREEMENT OF RECAPITALIZATION AND MERGER
 
     AGREEMENT OF RECAPITALIZATION AND MERGER (collectively, this 'Agreement'),
dated as of December 18, 1997, by and among PX Holding Corporation, a Delaware
corporation ('Purchaser'), PX Merger Corporation, a Delaware corporation, a
wholly owned subsidiary of Purchaser ('Merger Sub'), and Panavision Inc., a
Delaware corporation (the 'Company').
 
     WHEREAS, the Merger (as hereinafter defined) and this Agreement require the
vote of a majority of the issued and outstanding Common Shares (as hereinafter
defined) for the approval thereof (the 'Company Stockholder Approval');
 
     WHEREAS, the respective Boards of Directors of Merger Sub and the Company
have approved the merger of Merger Sub with and into the Company, as set forth
below (the 'Merger'), in accordance with the General Corporation Law of the
State of Delaware (the 'DGCL') and upon the terms and subject to the conditions
set forth in this Agreement, holders of shares of common stock, par value $.01
per share, of the Company (the 'Common Shares') issued and outstanding
immediately prior to the Effective Time (as defined below) will be entitled,
subject to the terms hereof and other than as set forth herein, to either (A)
receive the Cash Consideration (as hereinafter defined) or (B) retain the
Retained Common Shares(as hereinafter defined), in each case pursuant to the
Merger;
 
     WHEREAS, the Board of Directors of the Company (the 'Company Board') has,
in light of and subject to the terms and conditions set forth herein, (i)
determined that the Merger is in the best interests of the Company and its
stockholders, and (ii) resolved to approve and adopt this Agreement and the
transactions contemplated hereby and to recommend approval and adoption of this
Agreement by the stockholders of the Company;
 
     WHEREAS, Purchaser desires to purchase and the Company desires to issue and
sell to Purchaser a certain number of Common Shares pursuant to the terms and
conditions set forth in this Agreement (the 'Stock Purchase');
 
     WHEREAS, Purchaser, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the Stock Purchase, and also to set forth various conditions to the
Merger and the Stock Purchase; and
 
     WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes.
 
     NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein,
Purchaser, Merger Sub and the Company agree as follows:
 
                                   ARTICLE I
                                   THE MERGER
 
     SECTION 1.1  The Merger.  Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable

provisions of this Agreement and the DGCL, at the Effective Time (as hereinafter
defined) Merger Sub shall be merged with and into the Company. Following the
Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation (the 'Surviving
Corporation').
 
     SECTION 1.2  Effective Time.  As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the Company shall execute,
in the manner required by the DGCL, and deliver to the Secretary of State of the
State of Delaware Certificate of Merger duly executed and verified by the
appropriate parties hereto, and the parties shall take such other and further
actions as may be required by law to make the Merger effective. The time the
Merger becomes effective in accordance with applicable law is referred to herein
as the 'Effective Time.'
 
     SECTION 1.3  Effects of the Merger.  The Merger shall have the effects set
forth in the applicable provisions of the DGCL and as set forth herein. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
 
                                       1

<PAGE>

     SECTION 1.4  Certificate of Incorporation and By-Laws of the Surviving
Corporation.
 
     (a) The Amended and Restated Certificate of Incorporation of the Company
dated as of July 12, 1996 (the 'Amended and Restated Certificate of
Incorporation'), as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with the provisions thereof and hereof and applicable law,
or as otherwise contemplated hereby; and, provided that Section 13(b) shall be
restated in its entirety therein to read as follows, '(b) Expenses incurred in
defending a civil or criminal action, suit or proceeding shall (in the case of
any action, suit or proceeding against a director or officer of the Corporation)
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Section 13.'; and further provided, that a new
Section 16 shall be added thereto to read as follows, 'The Corporation expressly
elects not to be governed by Section 203 of the General Corporation Law of the
State of Delaware.'
 
     (b) The By-Laws of Merger Sub in effect at the Effective Time shall be the
By-Laws of the Surviving Corporation until thereafter amended, in accordance
with the provisions thereof, hereof and applicable law.
 
     SECTION 1.5  Directors and Officers.  Subject to applicable law,
immediately prior to the Effective Time, the directors of Merger Sub and the

officers of the Company shall be the initial directors and the initial officers,
respectively, of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
 
     SECTION 1.6  Closing.  The closing of the Merger (the 'Closing') shall take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VI hereof (the 'Closing Date'), at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New
York 10022-3897, unless another date or place is agreed to in writing by the
parties hereto.
 
                                   ARTICLE II
                   EFFECT OF THE MERGER ON THE CAPITAL STOCK
                        OF THE CONSTITUENT CORPORATIONS
 
     SECTION 2.1  Effect on Capital Stock.  As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any Common
Shares or any shares of capital stock of Merger Sub:
 
          (a) Common Stock of Merger Sub. All of the shares of common stock, par
     value $1.00 per share, of Merger Sub (the 'Merger Sub Common Stock'),
     issued and outstanding immediately prior to the Effective Time shall be
     converted into 10 (ten) Common Shares.
 
          (b) Cancellation of Treasury Stock. Each Common Share that is owned by
     the Company or by any wholly owned subsidiary of the Company shall
     automatically be canceled and retired and shall cease to exist, and no cash
     or other consideration shall be delivered or deliverable in exchange
     therefore.
 
          (c) Retention or Exchange of Common Shares. Except as otherwise
     provided herein and subject to Sections 2.2 and 2.3, each Common Share
     issued and outstanding immediately prior to the Effective Time shall, by
     virtue of the Merger, be treated as follows:
 
                (i) for each Common Share with respect to which an election to
           receive an amount in cash equal to $27.00 (the 'Cash Consideration')
           has been made and not revoked in accordance with Section 2.3 and for
           each Common Share for which no election has been made (the 'Cash
           Election Shares'), the right to receive the Cash Consideration. All
           Common Shares so exchanged for the Cash Consideration shall no longer
           be outstanding, shall automatically be canceled and retired and shall
           cease to exist, and each holder of a Certificate representing any
           such Common Shares shall, to the extent such Certificate represents
           such shares, cease to have any rights with respect thereto, except
           the right to receive the applicable Merger Consideration, upon
           surrender of such Certificate in accordance with Section 2.5.
 
                                       2

<PAGE>


                (ii) for each Common Share with respect to which an election to
           retain Common Shares has been made and not revoked in accordance with
           Section 2.3, the right to retain such fully paid and non-assessable
           Common Share (the 'Retained Common Shares' and, collectively with the
           Cash Consideration, the 'Merger Consideration').
 
     SECTION 2.2  Proration.
 
     (a) Notwithstanding anything in this Agreement to the contrary, the number
of Common Shares (the 'Cash Election Number') to be converted into the right to
receive the Cash Consideration shall be equal to not more than 88% of the number
of Common Shares issued and outstanding immediately prior to the Stock Purchase
and held of record or beneficially by stockholders of the Company other than
Warburg, Pincus Capital Company, L.P. ('Stockholder').
 
     (b) If the number of Cash Election Shares is greater than the Cash Election
Number, then each Cash Election Share shall (i) receive the Cash Consideration
in accordance with the terms of Section 2.1(c)(i) or (ii) be retained as a
Retained Common Share in accordance with the terms of Section 2.1(c)(ii) in the
following manner:
 
          (i) A proration factor (the 'Proration Factor') shall be determined by
     dividing the Cash Election Number by the total number of Cash Election
     Shares.
 
          (ii) The number of Cash Election Shares converted into cash in
     accordance with the terms of Section 2.1(c)(i) shall be determined by
     multiplying the Proration Factor by the total number of Cash Election
     Shares covered by such election, rounded down to the nearest whole number.
 
          (iii) All Cash Election Shares, other than those shares that shall
     receive cash in accordance with Section 2.3(b)(ii), shall be deemed to be
     Retained Common Shares (on a consistent basis among stockholders who made
     the election referred to in Section 2.3(a), pro rata to the number of
     shares as to which they made such election).
 
     SECTION 2.3  Election Procedures.
 
     (a) Each person who, on or prior to the Election Date (as defined in
Section 2.3(b) below), is a record holder of Common Shares will be entitled,
subject to Section 2.2 hereof, to make an unconditional election on or prior to
such Election Date specifying the number of Common Shares which he desires (i)
to have converted into the right to receive the Cash Consideration or (ii) to
retain as a Retained Common Share.
 
     (b) Subject to any required clearance by the Securities and Exchange
Commission (the 'SEC'), the Purchaser shall prepare a form of election (the
'Form of Election'), which form shall be subject to the reasonable approval of
the Company, to be mailed by the Company with the Proxy Statement to the record
holders of Common Shares as of the record date for the Special Meeting (as
hereinafter defined), which Form of Election shall be used by each record holder
of Common Shares who elects to specify the number of Common Shares which he
desires to have converted into the right to receive the Cash Consideration in
the Merger, subject to the provisions of Section 2.2 hereof. The Company will

use its reasonable best efforts to make the Form of Election available to all
persons who become holders of Common Shares during the period between such
record date and the Election Date, with a copy of the Proxy Statement. Any such
holder's election shall have been properly made only if such bank or trust
company as shall be mutually acceptable to Purchaser and the Company, acting as
exchange agent (the 'Exchange Agent') shall have received at its designated
office, by 5:00 p.m., New York City time on the business day prior to the date
of the Special Meeting (the 'Election Date'), a Form of Election properly
completed and signed and accompanied by Certificates (as hereinafter defined)
for the Common Shares to which such Form of Election relates, duly endorsed in
blank or otherwise in a form acceptable for transfer on the books of the Company
(or by an appropriate guarantee if delivery of such certificates as set forth in
such Form of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States, provided such certificates are in fact delivered to the Exchange
Agent within three New York Stock Exchange ('NYSE') trading days after the date
of execution of such guarantee of delivery).
 
     (c) Any Form of Election may be revoked by the holder submitting it to the
Exchange Agent only by written notice received by the Exchange Agent (i) prior
to 5:00 p.m., New York City time on the Election Date or
 
                                       3

<PAGE>

(ii) after the Election Date, if the Company and Purchaser determine, on or
prior to the Election Date, that the Closing is not likely to occur within three
business days following the Election Date, in which case any Form of Election
shall remain revocable until a subsequent date which shall be a date prior to
the Closing determined by the Company and the Purchaser. In addition, all Forms
of Election shall automatically be revoked if the Exchange Agent is notified in
writing by Merger Sub and the Company that the Merger has been abandoned. If a
Form of Election is revoked, the Certificate or Certificates (or guarantees of
delivery, as appropriate) for the Common Shares to which such Form of Election
relates shall be promptly returned to the stockholder submitting the same to the
Exchange Agent.
 
     (d) The determination of the Exchange Agent shall be binding with respect
to whether or not elections have been properly made or revoked pursuant to this
Section 2.3 and when elections and revocations were received by it. If the
Exchange Agent determines that any election was not properly made, such shares
shall be treated by the Exchange Agent as Retained Common Shares. The Exchange
Agent shall also make all computations as to the allocation and the proration
contemplated by Section 2.2, and any such computation shall be conclusive and
binding on the holders of Common Shares. The Exchange Agent may, with the mutual
agreement of Merger Sub and the Company, make such rules as are consistent with
this Section 2.3 for the implementation of the elections provided for herein as
shall be necessary or desirable fully to effect such elections.
 
     SECTION 2.4  Options; Stock Plans.  Each option held by an employee,
consultant or director of the Company to acquire Common Shares ('Company Stock
Option') that is outstanding immediately prior to the Merger, whether or not

then vested or exercisable, shall, simultaneously with the Merger, be cancelled
in exchange for a prompt payment of a single lump sum cash payment equal to the
product of (1) the number of Common Shares subject to such Company Stock Option
and (2) the excess, if any, of the Cash Consideration over the exercise price
per share of such Company Stock Option.
 
     SECTION 2.5  Exchange and Retention of Common Shares.
 
     (a) From time to time prior to the Effective Time, Purchaser shall take all
steps necessary to cause to be deposited on a timely basis with the Exchange
Agent in an account (the 'Exchange Fund') the Cash Consideration to which
holders of Common Shares shall be entitled at the Effective Time pursuant to
Section 2.1(c)(i).
 
     (b) Promptly after the Effective Time, Purchaser shall cause the Exchange
Agent to mail to each record holder of certificates (the 'Certificates') that
immediately prior to the Effective Time represented Common Shares a form of
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent and instructions for use in
surrendering such Certificates and receiving the Merger Consideration in respect
thereof.
 
     (c) In effecting the payment of the Cash Consideration in respect of Common
Shares represented by Certificates entitled to payment of the Cash Consideration
pursuant to Section 2.1(c)(i) and Section 2.2(b) (the 'Cashed Shares'), upon the
surrender of each such Certificate, the Exchange Agent at the time of such
surrender shall pay the holder of such Certificate the Cash Consideration
multiplied by the number of Cashed Shares, in consideration therefor. Upon such
payment, such Certificate shall forthwith be cancelled.
 
     (d) Until surrendered in accordance with paragraph (c) above, each such
Certificate (other than Certificates representing Common Shares held by any
affiliate of Merger Sub, in the treasury of the Company or by any wholly owned
subsidiary of the Company) shall represent solely the right to receive the
aggregate Cash Consideration relating thereto. No interest shall be paid or
accrued on the Cash Consideration. If the Cash Consideration (or any portion
thereof) is to be delivered to any person other than the person in whose name
the Certificate formerly representing Common Shares surrendered therefor is
registered, it shall be a condition to such right to receive such Cash
Consideration that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person surrendering such
Common Shares shall pay to the Exchange Agent any transfer or other taxes
required by reason of the payment of the Cash Consideration to a person other
than the registered holder of the Certificate surrendered, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
 
     (e) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to the Surviving Corporation, all cash
and other documents in its possession relating to the transactions
 
                                       4


<PAGE>

described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Common Share
electing the Cash Consideration may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in consideration therefor the applicable aggregate Cash
Consideration relating thereto, without any interest thereon.
 
     (f) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Common Shares which were
outstanding immediately prior to the Effective Time and which were surrendered
for exchange for the Cash Consideration. If, after the Effective Time,
Certificates formerly representing Common Shares are presented to the Surviving
Corporation or the Exchange Agent for exchange for the Cash Consideration, they
shall be surrendered and cancelled in return for the payment of the applicable
aggregate Cash Consideration relating thereto, as provided in this Article II.
 
     (g) No Liability. None of Merger Sub, Purchaser, the Company or the
Exchange Agent shall be liable to any person in respect of any Cash
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which the Cash Consideration would otherwise
escheat to or become the property of any Governmental Entity) any such
distributions or cash in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
 
                                  ARTICLE III
                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
     The Company represents and warrants to Purchaser and Merger Sub as follows:
 
     SECTION 3.1  Organization and Qualification; Subsidiaries.  The Company and
each of its Subsidiaries, is an entity duly organized, validly existing and in
good standing under the laws of its state or jurisdiction of organization and
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is in good standing as a
foreign entity in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and where
failure to be in good standing or to so qualify would have a Material Adverse
Effect on the Company. The term 'Material Adverse Effect on the Company,' as
used in this Agreement, means any change in or effect on the business, financial
condition, results of operations of the Company or any of its Subsidiaries that
would be materially adverse to the Company and its Subsidiaries taken as a
whole. Neither (i) seasonal variations in operating income, to the extent
reasonably consistent with prior periods, nor (ii) the existence of a labor
strike, in and of itself (that is, unless such labor strike has caused a
Material Adverse Effect on the Company), shall be deemed a Material Adverse
Effect on the Company. The Company has heretofore made available to Purchaser a
complete and correct copy of its Amended and Restated Certificate of
Incorporation and By-Laws.

 
     SECTION 3.2  Capitalization; Subsidiaries.
 
     (a) The authorized capital stock of the Company consists of 50,000,000
Common Shares and 2,000,000 shares of preferred stock, par value $.01 per share
('Preferred Stock'). As of the close of business on December 12, 1997,
18,155,000 Common Shares were issued and outstanding, all of which are entitled
to vote, and no Common Shares were held in the Company's treasury. The Company
has no shares of Preferred Stock issued or outstanding. The Company intends to
authorize the issuance, prior to the Effective Time, of up to 130,000 shares of
Series A Redeemable Preferred Stock of the Company, as contemplated by Section
5.10 of this Agreement. As of December 12, 1997,(i) there were 865,950 Common
Shares reserved for issuance pursuant to outstanding Options and rights granted
under the Stock Plans, and (ii) options to acquire an aggregate of 2,134,050
Common Shares have been issued pursuant to Company Stock Options. All the
outstanding shares of the Company's capital stock are duly authorized, validly
issued, fully paid and non-assessable. There are no bonds, debentures, notes or
other indebtedness having voting rights (or convertible into securities having
such rights) ('Voting Debt') of the Company or any of its Subsidiaries issued
and outstanding.
 
     (b) Except as set forth above, as set forth on Section 3.2 of the Company
Disclosure Schedule, and for the
 
                                       5

<PAGE>

transactions contemplated by this Agreement, (i) there are no shares of capital
stock of the Company authorized, issued or outstanding and (ii) there are no
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, convertible securities, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of its Subsidiaries, obligating the Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, convertible security, agreement, arrangement or
commitment.
 
     (c) Except as set forth in Section 3.2 of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares of the
capital stock of the Company or any Subsidiary or affiliate of the Company or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity. Except as set
forth in Section 3.2 of the Company Disclosure Schedule, and as permitted by
this Agreement, following the Merger, neither the Company nor any of its
Subsidiaries will have any obligation to issue, transfer or sell any shares of
its capital stock other than pursuant to employee benefit plans.
 
     SECTION 3.3  The Purchased Shares.  Upon delivery to Purchaser at the

Closing of certificates representing the Stock Purchase Common Shares, and upon
receipt of the Company of the payment in full therefor, (i) good and valid title
to the Stock Purchase Common Shares shall pass to the Purchaser, free and clear
of all liens and restrictions of any kind, except those pursuant to applicable
securities laws, and (ii) the Stock Purchase Common Shares shall be validly
issued, fully paid and nonassessable. Other than as provided for in this
Agreement, the Stock Purchase Common Shares are not, and upon their issuance
will not be, subject to any voting trust agreement or other contract, agreement,
commitment or understanding restricting or otherwise relating to the voting,
dividend rights or other disposition of the Stock Purchase Common Shares. The
Company has reserved 7,000,000 Common Shares for issuance pursuant to the Stock
Purchase.
 
     SECTION 3.4  Authority Relative to this Agreement.
 
     (a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and, except for the approval of this Agreement by the
stockholders of the Company, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized by the Company Board and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the approval of this
Agreement by the stockholders of the Company). This Agreement has been duly and
validly executed and delivered by the Company, and, assuming this Agreement
constitutes a valid and binding obligation of the Purchaser and Merger Sub,
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
 
     (b) The Company Board has taken any and all necessary and appropriate
action to render inapplicable to the Merger and the transactions contemplated by
this Agreement, including the Voting and Stockholders Agreement, dated as of
December 18, 1997, by and between Stockholder and Mafco Holdings Inc. (the
'Stockholders Agreement'), the provisions of Section 203 of the DGCL.
 
     SECTION 3.5  No Violation; Required Filings and Consents.
 
     (a) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of consent, termination, purchase, cancellation or acceleration of any
obligation or to loss of any property, rights or benefits under, or result in
the imposition of any additional obligation under, or result in the creation of
any Lien (as hereinafter defined) upon any of the properties or assets of the
Company or any of its Subsidiaries under, (i) the organizational documents of
the Company or any of its Subsidiaries, (ii) any contract, instrument, permit,
concession, franchise, license, loan or credit agreement, note, bond, mortgage,
indenture, lease or other property agreement, partnership or joint venture
agreement or other
 
                                       6


<PAGE>

legally binding agreement, whether oral or written (a 'Contract'), applicable to
the Company or any of its Subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
the following paragraph, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such violations, defaults, rights or Liens that individually or in
the aggregate would not have a Material Adverse Effect on the Company.
 
     (b) Other than in connection with, or in compliance with, the provisions of
the DGCL with respect to the transactions contemplated hereby, the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), the Securities Act of
1933 (the 'Securities Act'), the securities laws of the various states and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the 'HSR
Act'), no authorization, consent or approval of, or filing with, any
Governmental Entity (as hereinafter defined) is necessary for the consummation
by the Company of the transactions contemplated by this Agreement other than
authorizations, consents and approvals the failure to obtain, or filings the
failure to make, which would not, in the aggregate, have a Material Adverse
Effect on the Company. As used in this Agreement, the term 'Governmental Entity'
means any government or subdivision thereof, domestic, foreign or supranational
or any administrative, governmental or regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational.
 
     SECTION 3.6  SEC Reports and Financial Statements.
 
     (a) The Company has filed all forms, reports and documents required to be
filed by it with the SEC since November 20, 1996 (collectively, the 'Company SEC
Reports'). The Company SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No Subsidiary is
required to file any form, report or other document with the SEC.
 
     (b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Company SEC Reports (the 'Company Financial
Statements') (i) was prepared from the books of account and other financial
records of the Company and its Subsidiaries, (ii) was prepared in accordance
with United States generally accepted accounting principles ('U.S. GAAP')
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and (iii) presented fairly the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
respective dates thereof and the results of their operations and their cash
flows for the respective periods indicated therein except as otherwise noted
therein (subject, in the case of unaudited statements, to the omission of
footnotes and normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to have a Material Adverse
Effect on the Company).
 
     (c) The Company Financial Statements were prepared from the books of

account and other financial records of the Company and its Subsidiaries: (i) to
reflect all items of income and expense and all assets and liabilities required
to be reflected therein in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Company, (ii) are in all material
respects complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies and (iii) have been maintained in accordance with
good business and accounting practices.
 
     (d) Except for liabilities and obligations reflected on the September 30,
1997 consolidated balance sheet of the Company (including the notes thereto),
liabilities and obligations disclosed in Company SEC Reports filed prior to the
date of this Agreement and other liabilities and obligations incurred in the
ordinary course of business consistent with past practice since September 30,
1997, neither the Company nor any Subsidiary has any liabilities or obligation
of any nature (whether accrued, absolute, contingent or otherwise) which,
individually or in the aggregate, are or are reasonably likely to be material to
the Company and its Subsidiaries taken as a whole.
 
     (e) The Company has heretofore furnished to Purchaser complete and correct
copies of (i) all agreements, documents and other instruments not yet filed by
the Company with the SEC but that are currently in effect and that the Company
expects to file with the SEC after the date of this Agreement and (ii) all
amendments and modifications that have not been filed by the Company with SEC to
all agreements, documents and other
 
                                       7

<PAGE>

instruments that previously had been filed by the Company with the SEC and are
currently in effect.
 
     SECTION 3.7  No Undisclosed Liabilities.  Except (a) to the extent
disclosed (1) in the Company SEC Documents filed prior to the date of this
Agreement or (2) set forth on Section 3.7 of the Company Disclosure Schedule and
(b) for liabilities and obligations incurred since September 30, 1997 in the
ordinary course of business consistent with past practice or pursuant to the
terms of this Agreement, neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that have, or would be reasonably likely to have, a
Material Adverse Effect on the Company. Section 3.7 of the Company Disclosure
Schedule sets forth each instrument evidencing indebtedness of the Company and
its Subsidiaries which will accelerate or become due or payable, or result in a
right of redemption or repurchase on the part of the holder of such
indebtedness, or with respect to which any other payment or amount will become
due or payable, in any such case with or without due notice or lapse of time, as
a result of this Agreement, the Merger or the other transactions contemplated
hereby.
 
     SECTION 3.8  Litigation.  Except as set forth on Section 3.8 of the Company
Disclosure Schedule, there is no litigation, suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its Subsidiaries, which individually or in
the aggregate, would have a Material Adverse Effect on the Company or could

prevent the consummation of the transactions contemplated by this Agreement.
Except as disclosed in the SEC Reports filed prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, would have a Material Adverse Effect on the Company or could prevent
the consummation of the transactions contemplated hereby.
 
     SECTION 3.9  Properties and Assets; Real Property and Leases.
 
     (a) With respect to the real property owned by the Company or its
Subsidiaries (the 'Owned Property') the Company or its Subsidiaries have
sufficient title to all such property and assets to conduct their respective
businesses as currently conducted, with only such exceptions as set forth in
this Section 3.9 or which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
 
     (b) Set forth on Company Disclosure Schedule 3.9(b) is a true, correct and
complete list (including a general description of the uses for such real
property) of all real property owned or leased by the Company and each of its
Subsidiaries.
 
     (c) Except as would not have a Material Adverse Effect on the Company, each
parcel of real property owned by the Company or any Subsidiary (i) is owned free
and clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third
parties of any kind (collectively, 'Liens'), other than (A) those items set
forth on the Company Disclosure Schedule 3.9(c), (B) Liens for current taxes and
assessments not yet past due and payable, or if due and payable, which are being
contested in good faith, (C) inchoate mechanics' and materialman's Liens of
construction in progress, (D) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of the Company or
such Subsidiary, (E) all liens, easements and other matters of record, Liens and
other imperfections of title and encumbrances which, individually or in the
aggregate, would not materially and adversely affect the use of the property for
its intended purpose (F) any condition that may be shown by a current survey,
title report or physical inspection, and (G) zoning, building and other similar
restrictions (Liens described in clauses (A) through (G) being referred to
herein as 'Permitted Liens'), and (ii) except as set forth on the Company
Disclosure Schedule 3.9(c), with respect to any Owned Property, the Company has
not received written notice that such Owned Property is subject to any
governmental decree or order to be sold or is being condemned or otherwise taken
by any public authority with or without payment of compensation therefor, and,
to the best knowledge of the Company, no such condemnation or taking has been
proposed.
 
     (d) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary is bound, and all amendments and
modifications thereto are in full force and effect and, except as set forth on
the Company Disclosure Schedule 3.9(d) have not been modified or amended, and,
except as set forth on the Company Disclosure Schedule 3.9(d), the Company has
not received notice of any default under any such lease by the Company or any
Subsidiary, or to the knowledge of the Company, no other party thereto is in
default thereunder, nor to the

 
                                       8

<PAGE>

knowledge of the Company has any event which with notice or lapse of time or
both would constitute a default thereunder by the Company or any Subsidiary or,
to the knowledge of the Company, any other party thereto, occurred, except as,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
 
     SECTION 3.10  Insurance.  Set forth in Section 3.10 of the Company
Disclosure Schedule is a complete and accurate list of all primary, excess and
umbrella policies, bonds and other forms of insurance currently owned or held by
or on behalf of or providing insurance coverage to the Company or any
Subsidiary, their respective businesses, properties and assets (or their
directors, officers, salespersons, agents or employees). All policies set forth
in Section 3.10 of the Company Disclosure Schedule are in full force and effect
and shall remain in full force and effect through the Closing Date, except to
the extent replaced by substantially similar insurance coverage, and with
respect to all policies, all premiums currently payable or previously due have
been paid, and, to the best knowledge of the Company, no notice of cancellation
or termination has been received by the Company or any Subsidiary with respect
to any such policy, except for statutory notices. All such policies are
sufficient for compliance with all requirements of law and of all Contracts and
agreements to which the Company or any Subsidiary is a party or otherwise bound
and are valid, outstanding, collectible and enforceable policies and provide
insurance coverage which is adequate and customary for a business of the size
and type of the Company or any Subsidiary, as the case may be.
 
     SECTION 3.11  Information.  None of the information to be supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the definitive proxy statement to be used in connection with a meeting (the
'Special Meeting') of the Company's stockholders at which this Agreement and the
matters contemplated hereby will be considered and voted upon and the Form S-4
of which such proxy statement will form a part (collectively, the 'Proxy
Statement') or (ii) any other document to be filed with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
Agreement (the 'Other Filings') will, at the respective times filed with the SEC
or other Governmental Entity and, in addition, in the case of the Proxy
Statement, at the date it or any amendment or supplement thereto is mailed to
stockholders, at the time of the Special Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Company further represents that the Proxy Statement will comply
in all material respects with the provisions of applicable federal securities
laws.
 
     SECTION 3.12  Employee Benefit Plans.
 
     (a) Schedule 3.12(a) of the Company Disclosure Schedule contains a true and
complete list of each deferred compensation and each incentive compensation,
equity compensation plan, 'welfare' plan, fund or program (within the meaning of

section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
('ERISA')); 'pension' plan, fund or program (within the meaning of section 3(2)
of ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (an
'ERISA Affiliate'), that together with the Company would be deemed a 'single
employer' within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party for the benefit of any employee or former
employee of the Company or any Subsidiary (the 'Plans').
 
     (b) With respect to each Plan, the Company has made available to Purchaser
true and complete copies of the Plan and any amendments thereto (or if the Plan
is not a written Plan, a description thereof), any related trust or other
funding vehicle, any reports or summaries required under ERISA or the Code and
the most recent determination letter received from the Internal Revenue Service
with respect to each Plan intended to qualify under section 401 of the Internal
Revenue Code of 1986, as amended (the 'Code').
 
     (c) No liability under Title IV or section 302 of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).
 
     (d) No Plan is subject to Title IV of ERISA. Each Plan has been operated
and administered in all material
 
                                       9

<PAGE>

respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code, except whether failure to do so would not
reasonably be expected to have a Material Adverse Effect on the Company.
 
     (e) Each Plan intended to be 'qualified' within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code.
 
     (f) Except as set forth in the Company Disclosure Schedule 3.12(a), no Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees or former employees of the Company or any
Subsidiary for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii) death benefits
under any 'pension plan,' or (iii) benefits the full cost of which is borne by
the current or former employee (or his beneficiary).
 
     (g) There are no pending, threatened or anticipated claims by or on behalf
of any Plan, by any employee or beneficiary covered under any such Plan, or
other- wise involving any such Plan (other than routine claims for benefits),
except to the extent that such claims would not reasonably be expected to result
in a Material Adverse Effect on the Company.

 
     SECTION 3.13  Taxes.
 
     (a) Except as set forth in Schedule 3.13(a) of the Company Disclosure
Schedule, all Tax Returns (as hereinafter defined) by or on behalf of the
Company or any Subsidiary or any affiliated, combined or unitary group of which
the Company or any Subsidiary is or was a member, which if not filed would
result in a Material Adverse Effect, have been duly and timely filed with the
appropriate taxing authorities and were, in all material respects, true,
complete and correct.
 
     (b) Except as set forth in Schedule 3.13(b) of the Company Disclosure
Schedule, the Company and each Subsidiary has paid or will have had paid to the
appropriate taxing authority on its behalf, within the time and in the manner
prescribed by law, all Taxes (as hereinafter defined) for which it is liable and
which if not paid would result in a Material Adverse Effect.
 
     (c) The Company and each Subsidiary has established on its books and
records adequate reserves for the payment of all Taxes for which it is liable
which are not yet due and payable, and with respect to any such Taxes which have
been proposed, assessed or asserted against them and which, in each case, the
failure to establish adequate reserves for such Taxes would result in a Material
Adverse Effect.
 
     (d) The Company and each Subsidiary has complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes for which it is liable (including, without limitation, withholding of
such Taxes pursuant to sections 1441 and 1442 of the Code or similar provisions
under any state, local or foreign laws, and has, within the time and in the
manner prescribed by law, withheld and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over under all
applicable domestic and foreign laws, in each case in which the failure to so
comply and so withhold would result in a Material Adverse Effect.
 
     (e) Except as set forth in Schedule 3.13(e) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary has requested any extension of
time within which to file any Tax Return in respect of any taxable year, which
Tax Return has not since been filed.
 
     (f) Except as set forth in Schedule 3.13(f) of the Company Disclosure
Schedule, there are no outstanding waivers or comparable consents that have been
given by the Company or any Subsidiary or with respect to any Tax Return of the
Company or any Subsidiary regarding the application of any statute of
limitations with respect to any Taxes or Tax Returns of the Company or any such
Subsidiary.
 
     (g) Except as set forth in Schedule 3.13(g) of the Company Disclosure
Schedule (which shall set forth the nature of the proceeding, the type of
return, the deficiencies claimed, asserted, proposed or assessed and the amount
thereof, and the taxable year in question), no United States federal, state,
local or foreign audits or other administrative proceedings or court proceedings
are presently pending against the Company or any Subsidiary with regard to any
Taxes or Tax Returns of the Company or any Subsidiary the liability for which
would result in a Material Adverse Effect on the Company and no notification has

been received by the Company or any Subsidiary that such an audit or other
proceeding is pending or threatened.
 
                                       10

<PAGE>

     (h) Neither the Company nor any Subsidiary has participated in or
cooperated with an international boycott within the meaning of section 999 of
the Code.
 
     (i) Neither the Company nor any Subsidiary has filed a consent pursuant to
section 341(f) of the Code (or any predecessor provision) or agreed to have
section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in section 341(f)(4) of the Code) owned by either the
Company or any Subsidiary.
 
     (j) No property of the Company or any Subsidiary is property that the
Subsidiary or any party to this transaction is or will be required to treat as
being owned by another person pursuant to the provisions of section 168(f)(8) of
the Internal Revenue Code of 1954, as amended, as in effect prior to the
enactment of the Tax Reform Act of 1986.
 
     (k) Panavision Inc., Panavision Remote Systems Inc., Victor Duncan Inc.,
Keepco I Inc. and Keepco II Inc. are members of an affiliated group of
corporations within the meaning of section 1504(a) of the Code that includes the
Company; and such affiliated group filed a consolidated return with respect to
United States federal income taxes.
 
     (l) Except as set forth in Schedule 3.13(l) of the Company Disclosure
Schedule, there are no encumbrances for taxes upon the assets or properties of
the Company or any Subsidiary except for statutory encumbrances for Taxes not
yet due and payable.
 
     (m) Except as set forth in Schedule 3.13(m) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary has an obligation under any Tax
sharing agreement, Tax indemnification agreement or similar contract or
arrangement (including any agreement, contract or arrangement providing for the
sharing or ceding of credits or losses) or has a potential liability or
obligation to any person as a result of or pursuant to any such agreement,
contract, arrangement or commitment.
 
     (n) Except as set forth in Schedule 3.13(n) of the Company Disclosure
Schedule, no closing agreement pursuant to section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, local or foreign
law has been entered into by or on behalf of the Company or any Subsidiary.
 
     (o) Except as set forth in Schedule 3.13(o) of the Company Disclosure
Schedule, to the best knowledge of the Company and its Subsidiaries no
jurisdiction where the Company or any Subsidiary has not filed a Tax Return has
made a claim that the Company or such Subsidiary is required to file a Tax
Return in such jurisdiction.
 
     (p) All material elections with respect to Taxes of the Company or any

Subsidiary are set forth in Schedule 3.13(p) of the Company Disclosure Schedule.
 
     (q) The Company has previously delivered or made available to Purchaser
complete and accurate copies of each of (i) all audit reports, letter rulings
and technical advice memoranda relating to United States federal, state, local
or foreign Taxes due with respect to the income or business of the Company or
Panavision International, L.P., (ii) all income Tax Returns filed with any
taxing authority (or the relevant portions of any combined, consolidated, or
unitary Tax Return filed in any jurisdiction of which the Company or Panavision
International, L.P. is a member, including, without limitation, information
relating to the computation of taxable income) filed by or on behalf of the
Company or Panavision International, L.P. in the last three years, (iii) any
closing agreement, settlement agreement or similar agreement or arrangement
entered into by or on behalf of the Company or Panavision International, L.P.
with any taxing authority, and (iv) any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement entered into by or
on behalf of the Company or Panavision International, L.P.
 
     (r) The net operating losses, capital losses, charitable contributions,
foreign tax credits, general business credits and minimum tax credits for United
States federal, state, foreign and all other purposes, as applicable, of each of
the Company and any Subsidiary and the dates on which such net operating losses
and such other tax attributes will expire are set forth in Schedule 3.13(r) of
the Company Disclosure Schedule.
 
     (s) Except as set forth in Schedule 3.13(s) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary has an overall foreign loss (as
defined in section 904 of the Code and allocated under Treasury
 
                                       11

<PAGE>

Regulation section 1.1502-9) as of the taxable year ending December 31, 1996.
For all periods subsequent to the taxable year ending December 31, 1996, through
the Closing, the Company and its Affiliates (including any Subsidiary) have not
and will not take any action or engage in any transaction including, without
limitation, causing the Company or any Subsidiary to incur additional
liabilities and/or additional expenses (other than (i) any actions or
transaction made in the ordinary course of business, (ii) any transactions
contemplated by this Agreement or (iii) the acquisition by the Company of the
film services group of Visual Action Holdings Plc) that would create an overall
foreign loss allocable to the Company or any Subsidiary under Treasury
Regulation section 1.1502-9.
 
     (t) Except as set forth in Schedule 3.13(t) of the Company Disclosure
Schedule, no QEF elections (as defined in section 1295 of the Code) have been
filed by or on behalf of the Company or any Subsidiary.
 
     (u) For purposes of this Agreement, 'Taxes' shall mean all taxes, charges,
fees, levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, goods and
services, capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, severance, stamp, occupation, real and

personal property, social security, estimated, recording, gift, value assessed,
windfall profits or other taxes, customs duties, fees, assessments or charges of
any kind whatsoever, whether computed on a separate, consolidated, unitary,
combined or other basis, together with any interest, fines, penalties, additions
to tax or other additional amounts imposed by any taxing authority (domestic or
foreign). For purposes of this Agreement, 'Tax Return' shall mean any return,
declaration, report, estimate, information or other document (including any
documents, statements or schedules attached thereto) required to be filed with
any federal, state, local or foreign tax authority with respect to Taxes.
 
     SECTION 3.14  Environmental Matters.
 
     (a) Except as set forth on Section 3.14 of the Company Disclosure Schedule:
 
          (i) the Company and its Subsidiaries have been and are in compliance
     with all applicable Environmental Laws as in effect on the date hereof,
     except for such non-compliance violations and defaults as would not,
     individually or in the aggregate, have a Material Adverse Effect on the
     Company;
 
          (ii) the Company and its Subsidiaries possess all Environmental
     Permits required for the operation of the Business pursuant to
     Environmental Laws as in effect on the date hereof, all such Environmental
     Permits are in effect, there are no pending or, to the best knowledge of
     the Company, threatened proceedings to revoke such Environmental Permits
     and the Company and its Subsidiaries are, to the best knowledge of the
     Company, in compliance with all terms and conditions thereof, except for
     such failures to possess or comply with Environmental Permits as would not,
     individually or in the aggregate, have a Material Adverse Effect on the
     Company;
 
          (iii) except for matters which would not, individually or in the
     aggregate, have a Material Adverse Effect on the Company, neither the
     Company nor any Subsidiary has received any written notification that the
     Company or any Subsidiary, as a result of any of the current or past
     operations of the Business, or any property currently or formerly owned or
     leased in connection with the Business, is or may be the subject of any
     proceeding, investigation, claim, lawsuit or order by any Governmental
     Entity or other person as to whether (x) any Remedial Action is or may be
     needed to respond to a Release or threat of Release into the environment of
     Hazardous Substances as defined under Environmental Laws as in effect on or
     prior to the date hereof; (y) any Environmental Liabilities and Costs
     imposed by, under or pursuant to Environmental Laws as in effect on or
     prior to the date hereof shall be sought, or proceeding commenced, related
     to or arising from the current or past operations of the Business; or (z)
     the Company or any subsidiary is or may be a 'potentially responsible
     party' for a Remedial Action, pursuant to any Environmental Law as in
     effect on or prior to the date hereof, for the costs of investigating or
     remediating Releases or threatened Releases into the environment of
     Hazardous Substances, whether or not such Release or threatened Release has
     occurred or is occurring at properties currently or formerly owned, leased
     or operated by the Company and its Subsidiaries;
 
          (iv) except for Environmental Permits, none of the Company and its

     Subsidiaries has entered into any written agreement with any Governmental
     Entity by which the Company or any Subsidiary has assumed responsibility,
     either directly or as a guarantor or surety, for the remediation of any
     condition arising from or
 
                                       12

<PAGE>

     relating to a Release of Hazardous Substances as defined under
     Environmental Laws as in effect on or prior to the date hereof into the
     environment in connection with the Business, including for cost recovery
     with respect to such Releases or threatened Releases;
 
          (v) there is not now and has not been at any time in the past, a
     Release in connection with the current or former conduct of the Business of
     Hazardous Substances as regulated under Environmental Laws as in effect on
     or prior to the date hereof for which the Company or any Subsidiary is
     required or is reasonably likely to be required to perform a Remedial
     Action pursuant to Environmental Laws as currently in effect, or will incur
     Environmental Liabilities and Costs that would, individually or in the
     aggregate, have a Material Adverse Effect on the Company.
 
     (b) For purposes of this Section:
 
          (i) 'Business' means the current and former businesses of the Company
     and its Subsidiaries including, but not limited to, businesses or
     Subsidiaries that have been previously sold by the Company, its
     Subsidiaries or any predecessors thereto.
 
          (ii) 'Environmental Laws' means all Laws relating to the protection of
     the environment, or to any emission, discharge, generation, processing,
     storage, holding, abatement, existence, Release, threatened Release or
     transportation of any Hazardous Substances, including, but not limited to,
     (i) CERCLA, the Resource Conservation and Recovery Act, the Clean Water
     Act, the Clean Air Act, the Toxic Substances Control Act, as amended (the
     'TSCA'), property transfer statutes or requirements and (ii) all other
     requirements pertaining to reporting, licensing, permitting, investigation
     or remediation of emissions, discharges, Releases or threatened Releases of
     Hazardous Substances into the air, surface water, groundwater or land, or
     relating to the manufacture, processing, distribution, use, sale,
     treatment, receipt, storage, disposal, transport or handling of Hazardous
     Substances.
 
          (iii) 'Environmental Liabilities and Costs' means all damages, natural
     resource damages, claims, losses, expenses, costs, obligations, and
     liabilities (collectively, 'Losses'), whether direct or indirect, known or
     unknown, current or potential, past, present or future, imposed by, under
     or pursuant to Environmental Laws, including, but not limited to, all
     Losses related to Remedial Actions, and all fees, capital costs,
     disbursements, penalties, fines and expenses of counsel, experts,
     contractors, personnel and consultants based on, arising out of or
     otherwise in respect of (i) the Company, any Subsidiary (including
     predecessors and former Subsidiaries) or property owned, used or leased by

     the Company or any Subsidiary in respect of the Business at any time; (ii)
     conditions existing on, under, around, above or migrating from any such
     property; and (iii) expenditures necessary to cause any such property or
     the Company or any Subsidiary to be in compliance with requirements of
     Environmental Laws.
 
          (iv) 'Environmental Permits' means any federal, state, foreign,
     provincial or local permit, license, registration, consent, order,
     administrative consent order, certificate, approval or other authorization
     necessary for the conduct of the Business as currently conducted under any
     Environmental Law.
 
          (v) 'Hazardous Substances' means any substance that (a) is defined,
     listed or identified or otherwise regulated as a 'hazardous waste,'
     'hazardous material' or 'hazardous substance,' 'toxic substance,'
     'hazardous air pollution,' 'polluted,' or 'contaminated' or words of
     similar meaning and regulatory effect under CERCLA, TSCA or the Resource
     Conservation and Recovery Act or any other Environmental Law or analogous
     state or foreign law (including, without limitation, radioactive
     substances, asbestos, polycholorinated biphenyls, petroleum and petroleum
     derivatives and products) or (b) requires investigation, removal or
     remediation under applicable Environmental Law.
 
          (vi) 'Laws' means all (A) constitutions, treaties, statutes, laws
     (including, but not limited to, the common law), rules, regulations,
     ordinances or codes of any Governmental Entity, (B) Environmental Permits,
     and (C) orders, decisions, injunctions, judgments, awards and decrees of
     any Governmental Entity.
 
          (vii) 'Release' means as defined in CERCLA or the Resource
     Conservation and Recovery Act, without limiting its application to
     violations or alleged violations of those statutes, but not including any
     discharge, spill or emission that is the subject of, and in compliance
     with, an Environmental Permit.
 
                                       13

<PAGE>

          (viii) 'Remedial Action' means all actions required by Governmental
     Entity pursuant to Environmental Law or otherwise taken as necessary to
     comply with Environmental Law to (i) clean up, remove, treat or in any
     other way remediate any Hazardous Substances; (ii) prevent the release of
     Hazardous Substances so that they do not migrate or endanger or threaten to
     endanger public health or welfare or the environment; or (iii) perform
     studies, investigations or monitoring in respect of any such matter.
 
     SECTION 3.15  Absence of Certain Changes.  Since September 30, 1997, except
as contemplated by this Agreement or as disclosed in Company SEC Reports filed
prior to the date of this Agreement, the Company and its Subsidiaries have
conducted their business only in the ordinary course and in a manner consistent
with past practice and, since such date, there has not been (a) any Material
Adverse Effect on the Company, (b) any material change by the Company in its
accounting methods, principles or practices, except as may be required by GAAP,

(c) any damage, destruction or loss (whether or not covered by insurance) with
respect to properties or assets of the Company or any Subsidiary that,
individually or in the aggregate, is material to the Company and its
Subsidiaries taken as a whole, (d) any declaration, setting aside or payment of
any dividend or distribution in respect of Common Shares or any redemption,
purchase or other acquisition of any of its securities, (e) any revaluation by
the Company and its Subsidiaries of any asset (including, without limitation,
any writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business consistent with past
practice, (f) any entry by the Company or any Subsidiary into any commitment or
transaction material to the Company and its Subsidiaries taken as a whole,
except in the ordinary course of business consistent with past practice, (g) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or key employees of the Company or any
Subsidiary, except in the ordinary course of business consistent with past
practice, (h) any acquisition or disposition by the Company of any material
asset, except in the ordinary course of business except consistent with past
practice, (i) any incurrence, assumption or guarantee of any indebtedness or
obligation relating to any lending or borrowing except current liabilities and
commitments incurred in the ordinary course of business consistent with past
practice, or (j) any amendment, modification or termination of any existing, or
entering into any new, material contract, or any material plan, lease, license,
permit or franchise, except in the ordinary course of business consistent with
past practice.
 
     SECTION 3.16  Broker.  Except for the engagement of Goldman, Sachs & Co.,
none of the Company, any of its Subsidiaries, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement.
 
     SECTION 3.17  Opinion of Investment Banker.  The Company has received the
opinion of Goldman, Sachs & Co. to the effect that, as of December 17, 1997, the
Merger Consideration is fair to the Company's stockholders from a financial
point of view.
 
     SECTION 3.18  Board Recommendation.  The Company Board, at a meeting duly
called and held, has (a) determined that this Agreement and the transactions
contemplated hereby, taken together, are advisable and in the best interests of
the Company and its stockholders, and (b) subject to the other provisions
hereof, resolved to recommend that the holders of the Common Shares approve this
Agreement and the transactions contemplated hereby, including the Merger.
 
     SECTION 3.19  Required Company Vote.  The Company Stockholder Approval,
being the affirmative vote of a majority of the Common Shares, is the only vote
of the holders of any class or series of the Company's securities necessary to
approve this Agreement, the Merger and the other transactions contemplated
hereby.
 
     SECTION 3.20  Intellectual Property.

 
     (a) Section 3.20 of the Company Disclosure Schedule sets forth a list of
all material domestic and foreign Intellectual Property (as hereinafter
defined). Except as set forth on Section 3.20 of the Company Disclosure
Schedule;
 
     (b) To the Company's knowledge, the Company or a Subsidiary is the sole and
exclusive owner of the Intellectual Property set forth on Section 3.20 of the
Company Disclosure Schedule and has the sole and
 
                                       14

<PAGE>

exclusive right to use, sell, license, or bring actions for the infringement of
its rights thereto, free and clear of all Liens which would have a Material
Adverse Effect on the Company;
 
     (c) To the Company's knowledge, there are no royalties, fees or other
payments payable by the Company or any of its Subsidiaries to any person by
reason of ownership, use, license or sale of any of the Intellectual Property or
the conduct of the Company or its Subsidiaries' business which would have a
Material Adverse Effect on the Company;
 
     (d) To the Company's knowledge, neither the Company nor its Subsidiaries
has entered into or is otherwise bound by any consent, forebearance to sue,
settlement agreement or other agreement which limits the Company's or its
Subsidiaries' rights to use, sell or license any of the Intellectual Property
except as would not have a Material Adverse Effect on the Company;
 
     (e) All patent, trademark, service mark, copyright and other registrations
and applications set forth on Section 3.20 of the Company Disclosure Schedule
(x) are standing in the name of the Company or a Subsidiary, (y) are, with
respect to domestic registrations and applications, valid and subsisting, and
(z) to the Company's knowledge, are not subject to any pending, actual or
threatened interference, opposition, cancellation or other proceeding before any
court or registration authority which individually or in the aggregate would
have a Material Adverse Effect on the Company;
 
     (f) To the Company's knowledge, neither the Company nor its Subsidiaries
is, in any material respect, in breach, violation or default of the License
Agreements (and the Company is not aware of any event which has occurred which
with the giving of notice or the passage of time or both would constitute such a
breach, violation or default or give rise to any right of termination,
amendment, renegotiation, cancellation or acceleration under any such
agreement), and to the Company's knowledge, no other party to any such agreement
is in breach, violation or default thereof except as would not have a Material
Adverse Effect on the Company;
 
     (g) To the Company's knowledge, neither the manufacture, use, sale,
offering for sale, marketing or importation under, or the license of any of the
Intellectual Property set forth in Section 3.20 of the Company Disclosure
Schedule, nor the conduct of the Company's or its Subsidiaries' businesses in
the manner currently conducted or proposed to be conducted, violates, in any

material respect, any License Agreement, or conflicts with or infringes on the
rights of any person; no allegation of such an infringement has been made within
three (3) years preceding the date of this Agreement, and the Company is not
aware of any basis for such a claim; and, to the Company's knowledge, there is
no pending or threatened claim or litigation challenging or questioning the
validity of, or the Company's or its Subsidiaries' ownership or right to use,
sell, license, or bring actions for the infringement of its rights to the
Intellectual Property set forth in Schedule 3.20 of the Company Disclosure
Schedule which individually or in the aggregate would have a Materially Adverse
Effect on the Company, and the Company is not aware of any basis for such a
claim;
 
     (h) To the Company's knowledge, no person has infringed, misappropriated,
or misused any of the Intellectual Property, except as would not have a Material
Adverse Effect on the Company, and neither the Company nor any of its
subsidiaries has asserted any claim of infringement, misappropriation, or misuse
against any person within the past three (3) years;
 
     (i) To the Company's knowledge, the Company and its Subsidiaries have taken
all reasonably necessary steps to maintain and protect the Intellectual Property
set forth on Schedule 3.20 of the Company Disclosure Schedule; and
 
     (j) Except as would not have a Material Adverse Effect on the Company, the
Company is not aware of any facts or circumstances that exist which could render
any of the Intellectual Property invalid or unenforceable.
 
     (k) As employed herein, the term 'Intellectual Property' shall mean: (i)
any and all registered and unregistered trademarks, service marks, slogans,
trade names, logos and trade dress, both domestic and foreign, which are owned
by the Company or a Subsidiary (collectively, and together with the good will
associated with each, 'Trademarks'); (ii) any and all domestic and foreign
patents, patent applications, invention registrations and invention disclosures
which are owned by the Company or a Subsidiary (collectively, 'Patents'); (iii)
any and all registered and unregistered copyrights, both domestic and foreign,
which are owned by the Company or a Subsidiary, including, but not limited to,
programs and databases which are owned by the Company or a
 
                                       15

<PAGE>

Subsidiary (together, 'Software'); (iv) any and all unpatented or unpatentable
methods, devices, technology, trade secrets, proprietary information and
know-how which are owned by the Company or a Subsidiary (collectively,
'Technology'); and (v) any and all licenses, contracts or other agreements which
involve the development, acquisition, use, sale or license of intellectual
property rights and to which the Company or a Subsidiary is a party
(collectively, 'License Agreements).'
 
     SECTION 3.21  Related Party Transactions.  Except as set forth in Section
3.21 of the Company Disclosure Schedule hereto or as disclosed in SEC Reports
filed prior to the date of this Agreement, there are no contracts, agreements,
arrangements or understandings of any kind between any affiliate (other than any
Subsidiary) of the Company, on the one hand, and the Company or any Subsidiary,

on the other hand.
 
     SECTION 3.22  Labor Relations and Employment.
 
     (a) Except as set forth on Section 3.22(a) of the Company Disclosure
Schedule and except to the extent that such matters would not result in a
Material Adverse Effect on the Company, (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or, to the best knowledge of the
Company, threatened against the Company or any of its Subsidiaries, and during
the past three years there has not been any such action; (ii) to the best
knowledge of the Company, there are no union claims to represent the employees
of the Company or any of its Subsidiaries; (iii) neither the Company nor any of
its Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to employees of the
Company or any of its Subsidiaries; (iv) none of the employees of the Company or
any of its Subsidiaries is represented by any labor organization and the Company
does not have any knowledge of any current union organizing activities among the
employees of the Company or any of its Subsidiaries, nor does any question
concerning representation exist concerning such employees; (v) the Company and
its Subsidiaries are, and have at all times been, in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation;
(vi) there is no unfair labor practice charge or complaint against the Company
or any of its Subsidiaries pending or, to the best knowledge of the Company,
threatened before the National Labor Relations Board or any similar state or
foreign agency; (vii) there is no grievance arising out of any collective
bargaining agreement or other grievance procedure; (viii) no charges with
respect to or relating to the Company or any of its Subsidiaries are pending
before the Equal Employment Opportunity Commission or any other agency
responsible for the prevention of unlawful employment practices; (ix) neither
the Company nor any of its Subsidiaries has received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws to conduct an investigation with respect to or relating to
the Company or any of its Subsidiaries and no such investigation is in progress;
(x) there are no complaints, lawsuits or other proceedings pending or, to the
best knowledge of the Company, threatened in any forum by or on behalf of any
present or former employee of the Company or any of its Subsidiaries alleging
breach of any express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship; and
(xi) to the best knowledge of the Company, since the enactment of the Worker
Adjustment and Retraining Notification ('WARN') Act, there has not been (i) a
'plant closing' (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Company or any of its Subsidiaries, or (ii) a 'mass layoff' (as
defined in the WARN Act) affecting any site of employment or facility of the
Company or any of its Subsidiaries; nor has the Company or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law.
 

                                       16

<PAGE>

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
                          OF PURCHASER AND MERGER SUB
 
     Purchaser and Merger Sub represent and warrant to the Company as follows:
 
     SECTION 4.1  Organization and Qualification.  Each of Purchaser and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of Delaware and is not required to be qualified as a foreign
corporation under the laws of any jurisdiction.
 
     SECTION 4.2  Authority Relative to this Agreement.  Each of Purchaser and
Merger Sub has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Purchaser and Merger Sub and the
consummation by each of Purchaser and Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by their respective
Board of Directors and sole stockholder of each of Purchaser and Merger Sub and
no other corporate proceedings on the part of either Purchaser or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
each of Purchaser and Merger Sub and, assuming this Agreement constitutes a
valid and binding obligation of the Company, constitutes a valid and binding
agreement of each of Purchaser and Merger Sub, enforceable against each of
Purchaser and Merger Sub in accordance with its terms.
 
     SECTION 4.3  Capitalization of Merger Sub; Interests in the Company.  The
authorized capital stock of Merger Sub consists of the Merger Sub Common Stock.
As of the close of business on December 17, 1997, 10 shares of Merger Sub Common
Stock were issued and outstanding, all of which are entitled to vote, and no
shares of Merger Sub Common Stock were held in the Merger Sub's treasury. All
the outstanding shares of the Merger Sub's capital stock are duly authorized,
validly issued, fully paid and non-assessable. As of the date hereof, the
Purchaser and Merger Sub do not beneficially hold any Common Shares.
 
     SECTION 4.4  No Violation.
 
          (a) Neither the execution nor delivery of this Agreement by either
     Purchaser or Merger Sub nor the consummation by either Purchaser or Merger
     Sub of the transactions contemplated hereby shall (i) constitute a breach
     or violation of any provision of the Certificate of Incorporation or
     By-Laws of either Purchaser or Merger Sub or (ii) constitute a breach,
     violation or default (or any event which, with notice or lapse of time or
     both, would constitute a default) under, or result in the termination of,
     or accelerate the performance required by, or result in the creation of any
     lien or encumbrance upon any of the properties or assets of either
     Purchaser or Merger Sub under, any note, bond, mortgage, indenture, deed of
     trust, license, lease, agreement or other Contract to which either
     Purchaser or Merger Sub is a party or by which it or any of its properties
     or assets are bound or (iii) subject to the governmental filings and other

     matters referred to in the following paragraph, any judgment, order,
     decree, statute, law, ordinance, rule or regulation applicable to either
     Purchaser or Merger Sub or its properties or assets, other than, in the
     case of clauses (ii) and (iii), any such conflicts, violations, defaults,
     rights or Lien that individually or in the aggregate would not have a
     Material Adverse Effect on Purchaser or Merger Sub.
 
          (b) Other than in connection with, or in compliance with, the
     provisions of the DGCL with respect to the transactions contemplated
     hereby, the Exchange Act, the Securities Act, the securities laws of the
     various states and the HSR Act, no authorization, consent or approval of,
     or filing with, any Governmental Entity is necessary for the consummation
     by the Company of the transactions contemplated by this Agreement other
     than authorizations, consents and approvals the failure to obtain, or
     filings the failure to make, which would not, in the aggregate, have a
     Material Adverse Effect on Purchaser or Merger Sub. The term 'Material
     Adverse Effect on Purchaser or Merger Sub', as used in this Agreement,
     means any change in or effect on the business, financial condition, results
     of operations or prospects of Purchaser or Merger Sub that would be
     materially adverse to Purchaser or Merger Sub, respectively.
 
                                       17

<PAGE>

     SECTION 4.5  Information.  None of the information to be supplied by either
Purchaser or Merger Sub in writing specifically for inclusion or incorporation
by reference in (i) the Proxy Statement or (ii) the Other Filings will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to stockholders, at the time of the Special Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
 
     SECTION 4.6  No Prior Business.  Neither Purchaser nor Merger Sub has
engaged in any business or activity of any kind or entered into any agreement or
arrangement with any Person or incurred, directly or indirectly, any material
liabilities or obligations, other than in connection with the transactions
contemplated by this Agreement.
 
     SECTION 4.7  No Distribution.  Purchaser shall acquire any Common Shares
purchased pursuant to this Agreement for its own account and not with a view to
or for sale in connection with any distribution thereof, and Purchaser shall not
sell or otherwise dispose of any Common Shares, except in each case in
compliance with the Securities Act and the rules and regulations thereunder.
 
     SECTION 4.8  Broker.  Neither the Purchaser nor Merger Sub, or any of their
affiliates, has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement.
 
                                   ARTICLE V

                                   COVENANTS
 
     SECTION 5.1  Conduct of Business of the Company.  Except as contemplated by
this Agreement or as expressly agreed to in writing by Purchaser, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its Subsidiaries to, conduct its operations according to
its ordinary and usual course of business and consistent with past practice and
use its and their respective reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and others having
business dealings with them and to preserve goodwill. Without limiting the
generality of the foregoing, and except as (x) otherwise expressly provided in
or contemplated by this Agreement, (y) required by law, or (z) set forth on
Section 5.1 of the Company Disclosure Schedule, prior to the Effective Time, the
Company will not, and will cause its Subsidiaries not to, without the consent of
Purchaser:
 
          (a) except with respect to annual bonuses made in the ordinary course
     of business consistent with past practice, adopt or amend in any material
     respect any bonus, profit sharing, compensation, severance, termination,
     stock option, stock appreciation right, pension, retirement, employment or
     other employee benefit agreement, trust, plan or other arrangement for the
     benefit or welfare of any director, officer or employee of the Company or
     any of its Subsidiaries or increase in any manner the compensation or
     fringe benefits of any director, officer or employee of the Company or any
     of its Subsidiaries or pay any benefit not required by any existing
     agreement or place any assets in any trust for the benefit of any director,
     officer or employee of the Company or any of its Subsidiaries (in each
     case, except with respect to employees and directors in the ordinary course
     of business consistent with past practice);
 
          (b) incur any indebtedness for borrowed money or issue any debt
     securities or assume, guarantee or endorse, or otherwise as an
     accommodation become responsible for, the obligations of any Person, or
     make any loans or advances, except for (A) indebtedness incurred in the
     ordinary course of business and consistent with past practice, (B)
     indebtedness of the Company to a direct or indirect wholly owned Subsidiary
     to the Company or another direct or indirect wholly owned Subsidiary and
     (C) other indebtedness with a maturity of not more than one year incurred
     in the ordinary course of business consistent with past practice;
 
                                       18

<PAGE>

          (c) enter into any contract or agreement material to the business,
     results of operations, or financial condition of the Company and its
     Subsidiaries taken as a whole other than in the ordinary course of
     business, consistent with past practice;
 
          (d) sell, lease, license, mortgage or otherwise encumber or subject to
     any lien or otherwise dispose of any of its properties or assets other than
     immaterial properties or assets (or immaterial portions of properties or

     assets), (i) except in the ordinary course of business consistent with past
     practice or (ii) as otherwise reasonably necessary to comply with the terms
     of any (a) mortgage liens encumbering such Property, (b) insurance
     requirement or (c) laws, rules or regulations or any governmental
     authority;
 
          (e) (i) declare, set aside or pay any dividends on, or make any other
     distributions in respect of, any of its capital stock, (ii) split, combine
     or reclassify any of its capital stock or issue or authorize the issuance
     of any other securities in respect of, in lieu of or in substitution for
     shares of its capital stock or (iii) purchase, redeem or otherwise acquire
     any shares of capital stock of the Company or any of its Subsidiaries or
     any other securities thereof or any rights, warrants or options to acquire
     any such shares or other securities;
 
          (f) authorize for issuance, issue, deliver, sell or agree or commit to
     issue, sell or deliver (whether through the issuance or granting of
     options, warrants, commitments, subscriptions, rights to purchase or
     otherwise), pledge or otherwise encumber any shares of its capital stock or
     the capital stock of any of its Subsidiaries, any other voting securities
     or any securities convertible into, or any rights, warrants or options to
     acquire, any such shares, voting securities or convertible securities or
     any other securities or equity equivalents (including without limitation
     stock appreciation rights) (other than issuances upon exercise of options
     or pursuant to Company Stock Options);
 
          (g) amend its Amended and Restated Certificate of Incorporation,
     By-Laws or equivalent organizational documents or alter through merger,
     liquidation, reorganization, restructuring or in any other fashion the
     corporate structure or ownership of the Company or of any material
     Subsidiary of the Company;
 
          (h) acquire or dispose of (including, without limitation, by merger,
     consolidation, or acquisition or disposition or stock or assets) any
     interest in any corporation, partnership, other business organization or
     any division thereof or any assets, other than the acquisition or
     disposition of assets in the ordinary course of business consistent with
     past practice and any other acquisitions or dispositions for consideration
     which is not, individually, in excess of $2,500,000, and in the aggregate,
     in excess of $5,000,000;
 
          (i) settle or compromise any stockholder derivative suits arising out
     of the transactions contemplated hereby or any other litigation (whether or
     not commenced prior to the date of this Agreement) or settle, pay or
     compromise any claims not required to be paid, individually in an amount in
     excess of $50,000, or in the aggregate in excess of $250,000, other than in
     consultation and cooperation with Purchaser, and, with respect to any such
     settlement, with the prior written consent of Purchaser;
 
          (j) take any action, other than reasonable and usual actions in the
     ordinary course of business and consistent with past practice, with respect
     to accounting policies or procedures (including, without limitation,
     procedures with respect to the payment of accounts payable and collection
     of accounts receivable);

 
          (k) make any tax election or settle or compromise any material
     federal, state, local or foreign income tax liability;
 
          (l) take any action that would result in (i) any of the
     representations or warranties of the Company set forth in this Agreement
     that are qualified as to materiality becoming untrue, (ii) any of such
     representations or warranties that are not so qualified becoming untrue in
     any material respect or (iii) any of the conditions to the Merger set forth
     in Article VI not being satisfied; and
 
          (m) authorize or enter into any agreement to do anything prohibited by
     Sections 5.1(a) through (m).
 
     SECTION 5.2  Access to Information; Confidentiality.
 
     (a) To the fullest extent possible, consistent with applicable Law, the
Company shall afford to Purchaser and its officers, employees, accountants,
counsel, financial advisors and other representatives ('Representatives')
reasonable access during normal business hours during the period prior to
Effective Time to all the officers,
 
                                       19

<PAGE>

employees, agents, properties, books, contracts, commitments and records of the
Company and its Subsidiaries, and shall cooperate in furnishing, and cause its
officers, employees and agents to furnish, promptly to Purchaser and its
representatives all information concerning the business, properties and
personnel of the Company and its Subsidiaries as Purchaser may reasonable
request.
 
     (b) Until the Effective Time, Purchaser, Merger Sub and the Company shall
be bound by, and will hold any information received pursuant to this Agreement
in confidence in accordance with the terms of, the confidentiality agreement by
and between the Company and Mafco Consolidated Group, Inc., dated October 8,
1997 (the 'Confidentiality Agreement').
 
     (c) No investigation by either the Company or Merger Sub shall affect the
representations and warranties of the other.
 
     SECTION 5.3  Financing.  Purchaser shall use its reasonable best efforts to
conclude any financing necessary to consummate the transactions contemplated by
this Agreement on or before the Closing Date. The Company shall use, and shall
cause William C. Scott, Chairman of the Board and Chief Executive Officer, John
S. Farrand, President and Chief Operating Officer and Jeffrey J. Marcketta,
Executive Vice President, Chief Financial Officer and Treasurer to use, their
respective reasonable best efforts (consistent with the Company's obligations
pursuant to Section 5.1 of this Agreement) to assist the Purchaser in obtaining
any financing pursuant to this Section 5.3.
 
     SECTION 5.4  Stock Purchase.
 

     (a) Immediately prior to the consummation of the Merger, the Company shall
sell, transfer, assign and deliver the Designated Number of Common Shares (as
hereinafter defined) to the Purchaser, and the Purchaser shall purchase the
Designated Number of Common Shares from the Company for the Designated Per Share
Purchase Price (as hereinafter defined), payable by wire transfer of same day
funds; provided, that all conditions to the Merger contained in this Agreement
have been either satisfied or waived.
 
     (b) For purposes hereof:
 
             (i) 'Designated Per Share Purchase Price' shall mean the number
        obtained by dividing (x) the sum of (A) the number of Cashed Shares
        multiplied by $27.00, (B) the number Company Stock Options to be cashed
        out pursuant to Section 2.4 of this Agreement multiplied by $27.00, and
        (C) 100 times the number of redeemable preferred shares to be exchanged
        for cash pursuant to Section 7.3 of the Stockholders Agreement,
        multiplied by $26.50, by (y) the sum of (A) the number of Cashed Shares,
        (B) the number Company Stock Options to be cashed out pursuant to
        Section 2.4 of this Agreement, and (C) 100 times the number of
        redeemable preferred shares to be exchanged for cash pursuant to Section
        7.3 of the Stockholders Agreement; and
 
             (ii) 'Designated Number of Common Shares' shall mean such number of
        Common Shares which, when added to the number of Retained Shares and the
        number of Common Shares to be retained by the Stockholder pursuant to
        Section 7.3 of the Stockholders Agreement, results in a number of Common
        Shares which, when multiplied by the Designated Per Share Purchase
        Price, shall equal $215,000,000.
 
     SECTION 5.5  Efforts.
 
     (a) Upon the terms and subject to the conditions of this Agreement, each of
the parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable including, but not limited to, (i) the preparation and filing of all
forms, registrations and notices required to be filed to consummate the
transactions contemplated by this Agreement, including, (x) the prompt
preparation and filing with the SEC of the Proxy Statement, as well as any other
registration statement that may be required in connection with the financing of
the transactions contemplated by this Agreement, and (y) such actions as may be
required to have the Proxy Statement, and such other registration statements, if
any, declared effective under the Securities Act and the Proxy Statement cleared
by the SEC, in each case, as promptly as practicable, including by consulting
with each other as to and responding promptly to, any SEC comments with respect
thereto, and the taking of such actions as
 
                                       20

<PAGE>

are necessary to obtain any requisite approvals, consents, orders, exemptions or
waivers by any third party or Governmental Entity, and (ii) causing the

satisfaction of all conditions to the Closing.
 
     (b) Each party shall promptly consult with the other with respect to,
provide any necessary information that is not subject to legal privilege with
respect to, and provide the other (or its counsel) copies of, all filings made
by such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement. Each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the transactions contemplated by this Agreement. If either party receives a
request for additional information or documentary material from any such
Governmental Entity with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request.
 
     SECTION 5.6  Public Announcements.  The Company, on the one hand, and
Purchaser and Merger Sub, on the other hand, shall consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the Merger, the Stock Purchase and the other
transactions contemplated hereby, shall provide to the other party for review a
copy of any such press release or statement, and shall not issue any such press
release or make any such public statement prior to such consultation and review,
unless required by applicable law or any listing agreement with a securities
exchange.
 
     SECTION 5.7  Indemnification; Directors' and Officers' Insurance.
 
     (a) From and after the Effective Time, Purchaser shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
Subsidiaries (the 'Indemnified Parties') from and against all losses, claims,
damages, expenses or liabilities arising out of or related to actions or
omissions or alleged actions or omissions occurring at or prior to the Effective
Time to the same extent and on the same terms and conditions (including with
respect to advancement of expenses) provided for in the Company's Amended and
Restated Certificate of Incorporation and By-Laws and agreements in effect at
the date hereof (to the extent consistent with applicable law), which provisions
will survive the Merger and continue in full force and effect for six years
after the Effective Time. It is further understood and agreed that the Company
shall, to the fullest extent permitted under the DGCL and regardless of whether
the Merger becomes effective, indemnify, defend and hold harmless, and after the
Effective Time, the Surviving Corporation shall, to the fullest extent permitted
under the DGCL, indemnify, defend and hold harmless, each Indemnified Party
against any costs or expenses (including reasonable attorneys' fees),
judgements, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Company or the Surviving Corporation shall pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company or the Surviving Corporation, promptly as
statements therefor are received, and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,

however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and further, provided, that neither the Company nor
the Surviving Corporation shall be obliged pursuant to this Section 5.7 to pay
the fees and disbursements of more than one counsel for all Indemnified Parties
in any single action except to the extent that, in the opinion of counsel for
the Indemnified Parties, two or more of such Parties have conflicting interests
in the outcome of such action. Without limiting the foregoing, Purchaser shall,
and shall cause the Surviving Corporation to, advance expenses, including
reasonable attorney's fees and expenses, as incurred by an Indemnified Party
with respect to the foregoing to the fullest extent permitted under the DGCL,
provided that the Indemnified Party to whom expenses are advanced provides the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL.
 
     (b) The Surviving Corporation shall cause to be maintained in effect for
not less than four years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that the Surviving Corporation may substitute therefor other policies of at
least the same coverage amounts and which contain terms and conditions not less
advantageous to the beneficiaries of the current policies and provided that such
substitution shall not result in any gaps or lapses in coverage with respect to
matters
 
                                       21

<PAGE>

occurring prior to the Effective Time; and provided, further, that the Surviving
Corporation shall not be required to pay an annual premium in excess of 200% of
the last premium paid by the Company prior to the date hereof and if the
Surviving Corporation is unable to obtain the insurance required by this Section
5.7(b) for such maximum amount then it shall obtain as much comparable insurance
as possible for an annual premium equal to such maximum amount.
 
     (c) This Section 5.7 shall survive the consummation of the Merger, is
intended to benefit the Company, the Surviving Corporation and the Indemnified
Parties, and shall be binding on all successors and assigns of Purchaser, and
the Surviving Corporation.
 
     SECTION 5.8  Notification of Certain Matters.  Purchaser and the Company
shall promptly notify each other of (i) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (A) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (B)
to cause any covenant, condition or agreement under this Agreement not to be
complied with or satisfied and (ii) any failure of the Company, Purchaser or
Merger Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that no such notification shall affect the representations or
warranties of either party or the conditions to the obligations of either party
hereunder. Each of the Company, Purchaser and Merger Sub shall give prompt
notice to the other of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.

 
     SECTION 5.9  No Solicitation.
 
     (a) The Company and its Subsidiaries shall, and the Company shall direct
and use its reasonable best efforts to cause the officers, directors, employees,
representatives, agents and affiliates of the Company and its Subsidiaries to,
immediately cease any discussions or negotiations with any parties that may be
ongoing with respect to any Transaction Proposal (as hereinafter defined). The
Company shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any of its officers, directors, or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly,
 
     (i) solicit, initiate or encourage (including by way of furnishing
information or assistance) any inquiries or the making of any proposal which
constitutes, or may be reasonably expected to lead to, any Transaction Proposal
or
 
     (ii) enter into or participate in any discussions or negotiations regarding
any Transaction Proposal;
 
provided, however, that at any time prior to the receipt of the vote of the
Company's stockholders approving this Agreement and the transactions
contemplated hereby (the 'Required Vote') the Company may, in response to a
Transaction Proposal which the Board of Directors reasonably believes may
constitute, or result in the making of, a Superior Proposal (as hereinafter
defined) which was not solicited subsequent to the date hereof (x) furnish
information with respect to the Company to any Person pursuant to a
confidentiality agreement on terms no less favorable to the Company than the
Confidentiality Agreement; and (y) enter into or participate in discussions,
investigations or negotiations regarding such Transaction Proposal. The Company
shall promptly give written notice to Purchaser of the names of the person or
persons with respect to which it takes any action pursuant to subclauses (x) and
(y) of the preceding sentence and a general description of the actions taken.
 
     (b) Except as set forth in this Section 5.9, the Board of Directors of the
Company shall not (i) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to the Purchaser, the approval or recommendation by
such Board of Directors of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Transaction Proposal
or (iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Transaction Proposal. Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that it has received a Superior Proposal
(as defined below), the Board of Directors of the Company may, prior to the
receipt of the Required Vote, withdraw or modify its approval or recommendation
of the Merger and this Agreement, approve or recommend a Superior Proposal or
terminate this Agreement, but in each case, only at a time that is at least four
business days after Purchaser's receipt of written notice advising Purchaser
that
 
                                       22


<PAGE>

the Board of Directors of the Company has received a Transaction Proposal that
may constitute a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and the names of the person or persons making such
Superior Proposal.
 
     (c) Nothing contained in this Section 5.9 shall prohibit the Company from
taking and disclosing to its shareholders a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from making any disclosure to
the Company's shareholders if, in the good faith judgement of the Board of
Directors of the Company, after consultation with outside counsel, such
disclosure is necessary in order to comply with its fiduciary duties to the
Company's shareholders under applicable law or is otherwise required under
applicable law.
 
     (d) (i) For purposes of this Agreement, 'Transaction Proposal' means any
bona fide inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of more than 50% of the aggregate assets of the
Company and its subsidiaries, taken as a whole, or more than 50% of the voting
power of the shares of Common Stock then outstanding or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company, other than the transactions
contemplated by this Agreement.
 
     (ii) For purposes of this Agreement, a 'Superior Proposal' means any
proposal determined by the Board of Directors of the Company in good faith,
after consultation with outside counsel, to be a bona fide proposal and made by
a third party to acquire, directly or indirectly, for consideration consisting
of cash, property and/or securities, more than 50% of the voting power of the
shares of Common Stock then outstanding or all or substantially all the assets
of the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment, after consultation with outside
counsel and with a financial advisor of nationally recognized reputation, to be
more favorable to the Company's shareholders than the Merger (taking into
account all factors relating to such proposal deemed relevant by the Company
Board, including, without limitation, the financing of such proposal and all
other conditions to closing).
 
     SECTION 5.10  Redeemable Preferred Stock.  The Company shall from the date
of this Agreement and until the Closing reserve 130,000 shares of Series A
Redeemable Preferred Stock of the Company, free and clear of any lien or
encumbrance thereon, for issuance pursuant to Section 7.3 of the Stockholders
Agreement.
 
     SECTION 5.11  Affiliate Letters.  Prior to the Closing Date, the Company
shall deliver to Purchaser and Merger Sub a letter identifying all persons who
are, at the time this Agreement is submitted for approval to the stockholders of
the Company, 'affiliates' of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable best efforts to cause each
such person who makes or is deemed to have Retained Common Shares to deliver to
Purchaser on or prior to the Closing Date a written agreement in a form
reasonably satisfactory to Purchaser and the Company.
 

     SECTION 5.12  Reports.  The Company shall provide Purchaser with monthly
financial statements, prepared in accordance with past practice, as soon as
reasonably practicable following delivery of such reports to the Chief Executive
Officer of the Company.
 
     SECTION 5.13  Stockholders Meeting.
 
     (a) The Company, acting through the Company Board, shall, in accordance
with applicable law:
 
             (i) duly call, give notice of, convene and hold the meeting as soon
        as practicable following the execution of this Agreement;
 
             (ii) prepare and file with the SEC a preliminary proxy statement
        relating to this Agreement, and use its best efforts (A) to obtain and
        furnish the information required to be included by the SEC in the Proxy
        Statement and, after consultation with Purchaser, to respond promptly to
        any comments made by the SEC with respect to the preliminary proxy
        statement and cause the Proxy Statement to be mailed to its stockholders
        and (B) to obtain the necessary approvals of the Merger and this
        Agreement by its stockholders; and
 
             (iii) subject to Section 5.9, include in the Proxy Statement the
        recommendation of the Company Board that stockholders of the Company
        vote in favor of the approval of this Agreement.
 
                                       23

<PAGE>

     (b) The Company and Purchaser, shall promptly correct any information
provided by it for use in the Proxy Statement if and to the extent that it shall
have become false or misleading, and the Company shall further take all steps
necessary to cause the Proxy Statement as so corrected to be filed with the SEC
and to be disseminated to the holders of Common Shares, in each case, as and to
the extent required by applicable federal securities laws.
 
     SECTION 5.14  Employee Benefits.  As of the Effective Time, the Surviving
Corporation shall honor and satisfy all obligations and liabilities with respect
to the Plans. Notwithstanding the foregoing, the Surviving Corporation shall not
be required to continue any particular Plan after the Effective Time, and any
Plan may be amended or terminated subject to, and in accordance with, its terms
and applicable law. For a period of at least 18 months following the Effective
Time, the Surviving Corporation shall provide employee benefit plans, programs
and arrangements, either directly or through a plan of an affiliate ('Purchaser
Plans') that, in the aggregate, provide benefits not materially less favorable
than the Plans as currently in effect, provided that (i) each employee of the
Company shall receive full credit for years of service with the Company or any
of its subsidiaries prior to the Merger for all purposes for which such service
was recognized under applicable Plans, including, but not limited to,
recognition of service for eligibility, vesting (including acceleration thereof
pursuant to the terms of the applicable Plans) and, to the extent not
duplicative of benefits received under such Plans, the amount of benefits, (ii)
each employee of the Company shall participate in the Purchaser Plans on terms

no less favorable than those applicable to similarly situated employees in such
Purchaser Plans, and (iii) any and all pre-existing condition limitations (to
the extent such limitations did not apply to a pre-existing condition under the
Plans) and eligibility waiting periods under any group health plans shall be
waived with respect to such participants and their eligible dependents.
 
     SECTION 5.15  Other Actions.  With respect to each employee (the
'Individuals') of the Company who is a 'disqualified individual' (within the
meaning of section 280G of the Code) the Company shall (i) pay to each such
individual, prior to January 1, 1998, the amount determined by the Company to
have been earned by such individual in respect of the current fiscal year of the
Company under the Company's Executive Incentive Compensation Plan, (ii) take all
such reasonable actions (including, but not limited to, accelerating the
exercisability of Company Stock Options held by the Individuals) as shall be
necessary to permit each Individual to exercise, prior to January 1, 1998, a
sufficient number of Company Stock Options so as to permit the condition set
forth in Section 6.2(f) hereto to be satisfied and (iii) use its commercially
reasonable best efforts to loan to each Individual, on commercially reasonable
terms, the amount (the 'Withholding Amount') required to be withheld by the
Company under federal, state and local tax laws in respect of any exercise of a
Company Stock Option after the date hereof to the extent such exercise is
intended by the Individual to satisfy the condition set forth in Section 6.2(f)
hereof. To the extent that the Company is unable to lend all or part of the
Withholding Amount to one or more of the Individuals, Purchaser shall, or shall
cause one of its affiliates to, lend to each Individual an amount equal to the
excess, if any, of the Withholding Amount with respect to such Individual over
the amount loaned to such Individual by the Company pursuant to the preceding
sentence; provided, however, that the Purchaser's obligations under this
sentence shall be conditioned upon (1) the receipt by the Purchaser or such
affiliate of a first priority perfected security interest in all of the shares
of Common Shares acquired upon the exercise of such Company Stock Options and
(2) the making of arrangements satisfactory to the Purchaser for the
continuation of such first priority perfected security interest in all proceeds
of such Common Shares.
 
     SECTION 5.16  Listing of Common Stock.  The Company shall use its
reasonable best efforts to cause the Common Shares to be issued pursuant to the
Stock Purchase to be authorized for listing on the NYSE, subject to official
notice of issuance.
 
                                   ARTICLE VI
                    CONDITIONS TO CONSUMMATION OF THE MERGER
 
     SECTION 6.1  Conditions to the Obligations of Both Parties.  The respective
obligations of Purchaser, Merger Sub and the Company to consummate the Merger
are subject to the satisfaction, at or before the Effective Time, of each of the
following conditions:
 
          (a)  Stockholder Approval.  The stockholders of the Company shall have
     duly approved the transactions contemplated by this Agreement (the
     'Stockholder Approval').
 
                                       24


<PAGE>

          (b)  Form S-4.  The Form S-4 of which the Proxy Statement constitutes
     a part shall have become effective under the Securities Act and shall not
     be the subject of any stop order or proceedings seeking a stop order, and
     any material 'blue sky' and other state securities laws applicable to the
     registration and qualification of Common Shares shall have been complied
     with.
 
          (c)  Solvency Letters.  The Company and Purchaser shall each have
     received a solvency letter, in form and substance and from an independent
     evaluation firm reasonably satisfactory to both parties, as to the solvency
     of the Company and its Subsidiaries on a consolidated basis after giving
     effect to the transactions contemplated by this Agreement.
 
          (d)  Orders and Injunctions.  No Governmental Entity or court of
     competent jurisdiction shall have enacted, issued, promulgated, enforced or
     entered any Law, rule, regulation, executive order or Order which is then
     in effect and has the effect of restraining or making the Merger or the
     Stock Purchase illegal or otherwise prohibiting consummation of the Merger
     or the Stock Purchase.
 
          (e)  HSR Act.  Any waiting period (and any extension thereof) under
     the HSR Act applicable to the Merger and the Stock Purchase shall have
     expired or been terminated.
 
          (f)  The Stock Purchase.  Purchaser shall have purchased and the
     Company shall have issued and sold the Stock Purchase Shares pursuant to
     Section 5.4 of this Agreement.
 
     SECTION 6.2  Conditions to the Obligations of Purchaser and Merger
Sub.  The obligations of Purchaser and Merger Sub to effect the Merger are
further subject to the following conditions:
 
          (a)  Accuracy of Representations and Warranties.   The representations
     and warranties of the Company contained herein (without giving effect to
     the materiality, Material Adverse Effect or knowledge qualifications
     contained therein) shall be true and correct when made and shall be true
     and correct as of the Closing Date as though made on and as of the Closing
     Date (except to the extent that any such representation and warranty had by
     its terms been made as of a specific date, in which case such
     representation and warranty shall have been true and correct as of such
     specific date), except, in all instances, where the failure to be so true
     and correct shall not result, individually or in the aggregate, in a
     Material Adverse Effect; and Purchaser shall have received a certificate
     signed on behalf of the Company by the chief executive office and the chief
     financial officer of the Company to such effect.
 
          (b)  Performance of Obligations of the Company.  The Company shall
     have performed the obligations required to be performed by it under this
     Agreement at or prior to the Closing Date, except for such failures to
     perform as have not had or would not, individually or in the aggregate,
     have a Material Adverse Effect on the Company or materially adversely
     affect the ability of the Company to consummate the transactions

     contemplated hereby.
 
          (c) Release of Lien.  The lien referred to in Schedule 3.20(b) of the
     Company Disclosure Schedule shall have been released.
 
          (d) Material Adverse Effect.  There shall not have been a Material
     Adverse Effect on the Company.
 
          (e) Exchange of Common Shares.  Stockholder shall have exchanged not
     less than 88% of the Common Shares it owns, either of record or
     beneficially, for redeemable preferred common stock of the Company in
     accordance with Section 7.3 of the Stockholders Agreement.
 
          (f) Option Exercises.  Each of William C. Scott, John S. Farrand and
     Jeffery J. Marcketta shall have exercised, prior to January 1, 1998, a
     number of Company Stock Options reasonably determined by the Company (based
     upon the most recently available information and after taking into account
     the actions contemplated by Section 5.15 hereof) as the amount necessary
     such that, after giving effect to such exercise, no amount paid in respect
     of such Company Stock Options shall be subject to the excise tax imposed
     under section 4999 of the Code; it being understood that the foregoing
     shall not constitute a representation by the Company or any of Messrs.
     Scott, Farrand, or Marcketta that no such excise tax will in fact be
     imposed in respect of such payments. With respect to Individuals other than
     Messrs. Scott, Farrand, and Marcketta, the Company shall use reasonable
     efforts to cause such Individuals to exercise Company Stock Options as and
 
                                       25

<PAGE>

     to the extent described in the preceding sentence, it being understood that
     no such Individual shall be obligated to so exercise such Company Stock
     Options.
 
     SECTION 6.3  Conditions to the Obligations of the Company.  The obligation
of the Company to effect the Merger is further subject to the following
conditions:
 
          (a)  Accuracy of Representations and Warranties.  The representations
     and warranties of Purchaser and Merger Sub contained herein (without giving
     effect to the materiality, Material Adverse Effect or knowledge
     qualifications contained therein) shall be true and correct when made and
     shall be true and correct as of the Closing Date as though made on and as
     of the Closing Date (except to the extent that any such representation and
     warranty had by its terms been made as of a specific date, in which case
     such representation and warranty shall have been true and correct as of
     such specific date), except, in all instances, where the failure to be so
     true and correct shall not result, individually or in the aggregate, in a
     Material Adverse Effect on Purchaser and Merger Sub; and the Company shall
     have received a certificate signed on behalf of Purchaser by the chief
     executive officer and the chief financial officer of Purchaser to such
     effect.
 

          (b)  Performance of Obligations of Purchaser and Merger
     Sub.  Purchaser and Merger Sub shall each have performed their respective
     obligations required to be performed by it under this Agreement at or prior
     to the Closing Date, except for such failures to perform as have not had or
     would not, individually or in the aggregate, have a Material Adverse Effect
     on Purchaser and Merger Sub or materially adversely affect the ability of
     Purchaser and Merger Sub to consummate the transactions contemplated
     hereby.
 
                                  ARTICLE VII
                         TERMINATION; AMENDMENT; WAIVER
 
     SECTION 7.1  Termination.  This Agreement may be terminated and the Merger
and the Stock Purchase contemplated hereby may be abandoned at any time prior to
the Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
 
          (a) by the mutual written consent of Purchaser and the Company, by
     action of their respective Boards of Directors;
 
          (b) by Purchaser or the Company if the Merger and the Stock Purchase
     shall not have been consummated on or before the later (i) of April 30,
     1998 and (ii) 45 days after the SEC has declared effective the Proxy
     Statement (but in no event later than June 30, 1998); provided, however,
     that the right to terminate this Agreement pursuant to this Section 7.1(b)
     shall not be available to any party whose failure to perform any of its
     obligations under this Agreement results in the failure of the Merger or
     the Stock Purchase to be consummated by such time;
 
          (c) by Purchaser or the Company if any court of competent jurisdiction
     or other Governmental Entity has issued an order, decree or ruling or taken
     any other action restraining, enjoining or otherwise prohibiting the Merger
     and such order, decree, ruling or other action shall have become final and
     nonappealable;
 
          (d) by the Company, prior to the receipt of the Required Vote, in
     accordance with Section 5.9; provided, that the Purchaser receives at least
     the four business days' prior written notice specified in Section 5.9(b)
     and, during such four business day period, the Company shall, and shall
     cause its financial and legal advisors to, consider any adjustment in the
     terms and conditions of this Agreement that the Purchaser may propose;
 
          (e) by Purchaser, if the Company Board shall have (i) failed to
     recommend Stockholder Approval, (ii) withdrawn or modified in a manner
     adverse to Purchaser or Merger Sub its approval or recommendation of this
     Agreement, the Merger or the Stock Purchase, (iii) shall have approved or
     recommended a Transaction Proposal, or (iv) shall have resolved to effect
     any of the foregoing; or
 
          (f) by Purchaser or the Company, if Stockholder Approval shall not
     have been obtained by reason of the failure to obtain the required vote
     upon a vote held at a duly held meeting of stockholders or at any
     adjournment thereof.
 

                                       26

<PAGE>

     SECTION 7.2  Effect of Termination.  In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except for the provisions of this Section
7.2 and Section 7.3, which shall survive any such termination. Nothing contained
in this Section 7.2 shall relieve any party from liability for any breach of
this Agreement.
 
     SECTION 7.3  Fees and Expenses.
 
     (a) The parties to this Agreement shall, except as otherwise specifically
provided herein, bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, whether or not the Merger or the Stock Purchase is
consummated, including, without limitation, all fees and expenses of their
respective agents.
 
     (b) The prevailing party in any legal action undertaken to enforce this
Agreement or any provision hereof shall be entitled to recover from the other
party the costs and expenses (including attorneys' and expert witness fees)
incurred in connection with such action.
 
     SECTION 7.4  Amendment.  This Agreement may be amended by the Company,
Purchaser and Merger Sub at any time before or after any approval of this
Agreement by the stockholders of the Company but, after any such approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
 
     SECTION 7.5  Extension; Waiver.  At any time prior to the Effective Time,
Merger Sub, Purchaser and the Company may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive any
inaccuracies in the representations and warranties contained herein of the other
or in any document, certificate or writing delivered pursuant hereto by the
other or (iii) waive compliance by the other with any of the agreements or
conditions. Any agreement on the part of either party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
 
                                  ARTICLE VIII
                                 MISCELLANEOUS
 
     SECTION 8.1  Non-Survival of Representations and Warranties.  The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 2.5, Section 5.6 and Section 5.7 shall survive the Effective Time
indefinitely (except to the extent a shorter period of time is explicitly
specified therein).
 

     SECTION 8.2  Entire Agreement; Assignment.
 
     (a) This Agreement (including the documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
 
     (b) Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by either of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other party
(except that Purchaser and Merger Sub may assign its rights, interest and
obligations to any of its affiliates without the consent of the Company provided
that no such assignment shall relieve Purchaser or Merger Sub of any liability
for any breach by such assignee). Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
 
     SECTION 8.3  Validity.  The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
 
                                       27

<PAGE>

     SECTION 8.4  Notices.  All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or telecopier to the
respective parties as follows:
 
          If to Purchaser or Merger Sub:
 
         PX Holding Corporation 625
         Madison Avenue New York,
         New York, 10021
         Attention: General Counsel
         Telecopier Number: (212) 572-5056
         with a copy to:
 
         Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue
         New York, New York 10022
         Attention: Alan C. Myers, Esq.
         Telecopier Number: (212) 735-2000
 
         If to the Company:
 
         Panavision Inc.
         6219 De Soto Avenue
         Woodland Hills, California 91367
         Attention: Jeffrey J. Marcketta
         Telecopier Number: (818) 316-1110
 
         and

 
         Panavision Inc.
         85 Third Avenue, Suite 3020
         New York, New York 10022
         Attention: William C. Scott
         Telecopier Number: (212) 688-4748
         with a copy to:
 
         Willkie Farr & Gallagher
         One Citicorp Center
         New York, New York 10022-4669
         Attention: Christopher E. Manno, Esq.
         Telecopier Number: (212) 821-8111
 
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided, that notice of any change of address shall be effective only upon
receipt thereof.
 
     SECTION 8.5  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
 
     SECTION 8.6  Descriptive Headings.  The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
 
     SECTION 8.7  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
 
     SECTION 8.8  Parties in Interest.  Except with respect to Sections 2.4 and
5.7 (which are intended to be for the benefit of the persons identified therein,
and may be enforced by such persons), this Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or
 
                                       28

<PAGE>

implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
 
     SECTION 8.9  Certain Definitions.  As used in this Agreement:
 
          (a) the term 'affiliate', as applied to any person, shall mean any
     other person directly or indirectly controlling, controlled by, or under
     common control with, that person. For the purposes of the definition,
     'control' (including, with correlative meanings, the terms 'controlling,'
     'controlled by' and 'under common control with'), as applied to any person,
     means the possession, directly or indirectly, of the power to direct or
     cause the direction of the management and policies of that person, whether

     through the ownership of voting securities, by contract or otherwise;
 
          (b) the term 'Person' or 'person' shall include individuals,
     corporations, partnerships, trusts, other entities and groups (which term
     shall include a 'group' as such term is defined in Section 13(d)(3) of the
     Exchange Act); and
 
          (c) the term 'Subsidiary' or 'Subsidiaries', with respect to any
     person, means any corporation, partnership, joint venture or other legal
     entity of which such person (either alone or through or together with any
     other subsidiary), owns, directly or indirectly, stock or other equity
     interests the holders of which are generally entitled to more than 50% of
     the vote for the election of the board of directors or other governing body
     of such corporation or other legal entity.
 
     SECTION 8.10  Specific Performance.  Irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached; accordingly,
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
 
                                       29

<PAGE>

     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer hereunto duly authorized, all
as of the day and year first above written.
 
                                          PANAVISION INC.

                                          By:            /s/ W.C. SCOTT         
                                             -----------------------------------
                                             Name: W.C. Scott
                                             Title:  Chairman and CEO
 
                                          PX MERGER CORPORATION

                                          By:          /s/ HOWARD GITTIS   
                                             -----------------------------------
                                             Name: Howard Gittis
                                             Title:  Vice Chairman
 
                                          PX HOLDING CORPORATION

                                          By:          /s/ HOWARD GITTIS
                                             -----------------------------------
                                             Name: Howard Gittis
                                             Title:  Vice Chairman
 
                                   GUARANTEE
 
     Mafco Holdings Inc. hereby unconditionally and irrevocably agrees to
guarantee due and punctual performance of all obligations of PX Merger
Corporation and PX Holding Corporation hereunder.
 
                                          MAFCO HOLDINGS INC.,
                                          a Delaware corporation
 
                                          By:          /s/ HOWARD GITTIS
                                             -----------------------------------
                                             Name: Howard Gittis
                                             Title:  Vice Chairman
 
                                       30

<PAGE>


                                   ANNEX II


<PAGE>

             AMENDED AND RESTATED VOTING AND STOCKHOLDERS AGREEMENT
 
     Amended and Restated Voting and Stockholders Agreement, dated as of April
16, 1998 (this 'Agreement'), by and among Warburg, Pincus Capital Company, L.P.,
a Delaware limited partnership ('Warburg'), Panavision Inc., a Delaware
corporation (the 'Company'), and Mafco Holdings Inc., a Delaware corporation
('Purchaser'). Capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement (as defined below).
 
                                    RECITALS
 
     WHEREAS, the Company, Purchaser and Warburg, have previously entered into a
Voting and Stockholders Agreement, dated as of December 18, 1997, as amended by
the First Amendment dated as of March 16, 1998 (collectively, the 'First
Stockholders Agreement') and now wish to restate the First Stockholders
Agreement in its entirety; and
 
     WHEREAS, PX Holding Corporation, a Delaware corporation ('Holdings'), PX
Merger Corporation, a Delaware corporation and a wholly owned subsidiary of
Holdings ('Merger Sub'), and the Company have previously entered into an
Agreement of Recapitalization and Merger, dated as of December 18, 1997 (as such
agreement may hereafter be amended from time to time, the 'Merger Agreement'),
pursuant to which Merger Sub shall be merged with and into the Company (the
'Merger'); and
 
     WHEREAS, as an inducement and a condition to the Company and the
Purchaser's subsidiaries entering into the Merger Agreement and incurring the
obligations set forth therein, each of the Company, the Purchaser and Warburg
required the other parties hereto to enter into the First Stockholders
Agreement.
 
     NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, the parties hereto, intending to be legally bound hereby,
agree to amend and restate the First Stockholders Agreement as follows:
 
     1. REPRESENTATIONS AND WARRANTIES OF WARBURG. Warburg hereby represents and
warrants as follows:
 
          1.1  Ownership of Shares.  Warburg is the beneficial owner, and has
     sole power to vote and dispose, of 12,717,000 shares of Common Stock, par
     value $.01 per share ('Company Common Stock'), of the Company (such shares
     shall constitute the 'Shares'). On the date hereof, the Shares constitute
     all of the outstanding shares of Company Common Stock owned of record or
     beneficially by Warburg.
 

          1.2  Authorization; Validity of Agreement; Necessary Action.  Warburg
     has all necessary power and authority to execute and deliver this Agreement
     and to consummate the transactions contemplated hereby. The execution,
     delivery and performance by Warburg of this Agreement and the consummation
     by Warburg of the transactions contemplated hereby have been duly and
     validly authorized. This Agreement has been duly executed and delivered by
     Warburg, and constitutes a valid and binding obligation of Warburg,
     enforceable against it in accordance with its terms, except that (i) such
     enforcement may be subject to applicable bankruptcy, insolvency or other
     similar laws, now or hereafter in effect, affecting creditors' rights
     generally, and (ii) the remedy of specific performance and injunctive and
     other forms of equitable relief may be subject to equitable defenses and to
     the discretion of the court before which any proceeding therefor may be
     brought.
 
          1.3  No Violations.  (a) Except for filings, authorizations, consents
     and approvals as may be required under, and other applicable requirements
     of, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
     (the 'HSR Act') and the Securities Exchange Act of 1934, as amended (the
     'Exchange Act') (A) no filing with, and no permit, authoriza tion, consent
     or approval of, any state or federal public body or authority is necessary
     for the execution of this Agreement by Warburg and the consummation by
     Warburg of the transactions contemplated hereby and (B) neither the
     execution and delivery of this Agreement by Warburg nor the consummation by
     Warburg of the transactions contemplated hereby nor compliance by Warburg
     with any of the provisions hereof shall (x) conflict with or result in any
     breach of any applicable partnership agreement or other agreements or
     organizational documents applicable to Warburg, (y) result in a violation
     or breach of, or constitute (with or without notice or lapse of time or
     both) a default (or give rise to any third party right of termination,
     cancellation, material modification or acceleration) under any of the

<PAGE>

     terms, conditions or provisions of any note, bond, mortgage, indenture,
     license, contract, commitment, arrangement, understanding, agreement or
     other instrument or obligation of any kind to which Warburg is a party or
     by which Warburg or any of its properties or assets may be bound or (z)
     violate any order, writ, injunction, decree, judgment, statute, rule or
     regulation applicable to Warburg or any of its properties or assets.
 
          (b) The Shares and the certificates representing such Shares are held
     by Warburg, or by a nominee or custodian for the benefit of Warburg, free
     and clear of all liens, claims, security interests, proxies, voting trusts
     or agreements, understandings or arrangements or any other encumbrances
     whatsoever, except for any such encumbrances or proxies arising hereunder.
     Warburg currently has, and upon the exercise of the options set forth in
     Sections 3 and 4 hereof shall sell, assign, transfer and deliver to the
     Purchaser at the Closing, and the Purchaser shall receive at the Closing,
     good, valid and marketable title to the Company Common Stock.
 
     2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to Warburg and the Company as follows:
 

          2.1  Organization.  The Purchaser is a corporation duly organized,
     validly existing and in good standing under the laws of the State of
     Delaware.
 
          2.2  Authorization; Validity of Agreement; Necessary Action.  The
     Purchaser has all necessary power and authority to execute and deliver this
     Agreement and to consummate the transactions contemplated hereby. The
     execution, delivery and performance by the Purchaser of this Agreement and
     the consummation by the Purchaser of the transactions contemplated hereby
     have been duly and validly authorized. This Agreement has been duly
     executed and delivered by the Purchaser, and constitutes a valid and
     binding obligation of the Purchaser, enforceable against it in accordance
     with its terms, except that (i) such enforcement may be subject to
     applicable bankruptcy, insolvency or other similar laws, now or hereafter
     in effect, affecting creditors rights generally, and (ii) the remedy of
     specific performance and injunctive and other forms of equitable relief may
     be subject to equitable defenses and to the discretion of the court before
     which any proceeding therefor may be brought.
 
          2.3  No Violations.  Except for filings, authorizations, consents and
     approvals as may be required under, and other applicable requirements of,
     the HSR Act and the Exchange Act (A) no filing with, and no permit,
     authorization, consent or approval of, any state or federal public body or
     authority is necessary for the execution of this Agreement by the Purchaser
     and the consummation by it of the transactions contemplated hereby and (B)
     neither the execution and delivery of this Agreement by it nor the
     consummation by it of the transactions contemplated hereby nor compliance
     by it with any of the provisions hereof shall (x) conflict with or result
     in any breach of any organizational documents of the Purchaser, (y) result
     in a violation or breach of, or constitute (with or without notice or lapse
     of time or both) a default (or give rise to any third party right of
     termination, cancellation, material modification or acceleration) under any
     of the terms, conditions or provisions of any note, bond, mortgage,
     indenture, license, contract, commitment, arrangement, understanding,
     agreement or other instrument or obligation of any kind to which the
     Purchaser is a party or by which the Purchaser or any of its properties or
     assets may be bound or (z) violate any order, writ, injunction, decree,
     judgment, statute, rule or regulation applicable to the Purchaser or any of
     its properties or assets.
 
     3. OPTION GRANTED TO THE PURCHASER. (a) Warburg hereby grants to the
Purchaser an irrevocable option to purchase, in whole and not in part, the
Shares held by Warburg during the Option Period (as defined below), on the terms
and subject to the conditions set forth herein (the 'Purchaser Option').
 
     (b) The Purchaser Option may be exercised by the Purchaser during the
period commencing at 9:00 a.m., New York time on the day following the first
anniversary of the Effective Time of the Merger and ending at 5:00 p.m., New
York time on the second anniversary of the Effective Time of the Merger (the
'Option Period').
 
     (c) If the Purchaser wishes to exercise the Purchaser Option, the Purchaser
shall send a written notice to Warburg of its irrevocable election to exercise
the Purchaser option, specifying the place, and, if then known, the time and the

date (the 'Purchaser Option Closing Date') of the closing (the 'Purchaser Option
Closing') of the purchase. The Purchaser Option Closing Date shall occur on the
fifth business day (or such longer period as may
 
                                       2

<PAGE>

be required by applicable law or regulation) after the later of (i) the date on
which such notice is delivered and (ii) the satisfaction of the conditions set
forth in Section 3(f) hereof.
 
     (d) At the Purchaser Option Closing, Warburg shall deliver to the Purchaser
(or its designee) all of the Shares by delivery of a certificate or cer
tificates evidencing such Shares, duly endorsed to the Purchaser or accompanied
by stock powers duly executed in favor of the Purchaser, with all neces sary
stock transfer stamps affixed.
 
     (e) At the Purchaser Option Closing, the Purchaser shall pay to Warburg, by
wire transfer in immediately available funds to the account of Warburg specified
in writing no less than one day prior to the Purchaser Option Closing, an amount
equal to the product of $30.00 and the number of Shares (such number being
subject to adjustment for stock splits, recapitalizations and other similar
events, as set forth in Section 13.11 hereof) purchased pursuant to the exercise
of the Purchaser Option (the 'Purchaser Option Purchase Price').
 
     (f) The Purchaser Option Closing shall be subject to the satisfaction of
each of the following conditions:
 
          (i) no court, arbitrator or governmental body, agency or official
     shall have issued any order, decree or ruling (which has not been stayed or
     suspended pending appeal) and there shall not be any effective statute,
     rule or regulation, restraining, enjoining or prohibiting the consummation
     of the purchase and sale of the Shares pursuant to the exercise of the
     Purchaser Option;
 
          (ii) any waiting period applicable to the consummation of the purchase
     and sale of the Shares pursuant to the exercise of the Purchaser Option
     under the HSR Act shall have expired or been terminated; and
 
          (iii) all actions by or in respect of, and any filing with, any
     governmental body, agency, official, or authority required to permit the
     consummation of the purchase and sale of the Shares pursuant to the
     exercise of the Purchaser Option shall have been obtained or made and shall
     be in full force and effect.
 
     4. OPTION GRANTED TO WARBURG. (a) The Purchaser hereby grants to Warburg an
irrevocable option to sell to the Purchaser, in whole and not in part, the
Shares held by Warburg, on the terms and subject to the conditions set forth
herein (the 'Warburg Option').
 
     (b) The Warburg Option may be exercised by Warburg during the Option
Period.
 

     (c) If Warburg wishes to exercise the Warburg Option, Warburg shall send a
written notice to the Purchaser of its irrevocable election to exercise the
Warburg Option, specifying the place, and, if then known, the time and the date
(the 'Warburg Option Closing Date') of the closing (the 'Warburg Option
Closing') of the purchase. The Warburg Option Closing Date shall occur on the
fifth business day (or such longer period as may be required by applicable law
or regulation) after the later of (i) the date on which such notice is delivered
and
 
          (ii) the satisfaction of the conditions set forth in Section 4(f)
     hereof.
 
     (d) At the Warburg Option Closing, Warburg shall deliver to the Purchaser
(or its designee) all of the Shares by delivery of a certificate or certificates
evidencing such Shares, duly endorsed to the Purchaser or accompanied by stock
powers duly executed in favor of the Purchaser, with all necessary stock
transfer stamps affixed.
 
     (e) At the Warburg option Closing, the Purchaser shall pay to Warburg, by
wire transfer in immediately available funds to the account of Warburg specified
in writing no less than one day prior to the Warburg Option Closing, an amount
equal to the product of $25.00 and the number of Shares (such number being
subject to adjustment for stock splits, recapitalizations and other similar
events, as set forth in Section 13.11 hereof) purchased pursuant to the exercise
of the Warburg Option (the 'Warburg Option Purchase Price').
 
     (f) The Warburg option Closing shall be sub ject to the satisfaction of
each of the following conditions:
 
          (i) no court, arbitrator or governmental body, agency or official
     shall have issued any order, decree or ruling (which has not been stayed or
     suspended pending appeal) and there shall not be any effective statute,
     rule or regulation, restraining, enjoining or prohibiting the consummation
     of the purchase and sale of the Shares pursuant to the exercise of the
     Warburg Option;
 
          (ii) any waiting period applicable to the consummation of the purchase
     and sale of the Shares pursuant to the exercise of the Warburg Option under
     the HSR Act shall have expired or been terminated; and
 
                                       3

<PAGE>

          (iii) all actions by or in respect of, and any filing with, any
     governmental body, agency, official, or authority required to permit the
     consummation of the purchase and sale of the Shares pursuant to the
     exercise of the Warburg Option shall have been obtained or made and shall
     be in full force and effect.
 
     5. THIRD PARTY BUSINESS COMBINATION; REMEDY. (a) If (i) the Merger
Agreement is terminated in accordance with Section 7.1(d), (e) or (f) of the
Merger Agreement, or (ii) the Merger Agreement shall have been amended to
increase the amount of the Merger Consideration in effect on the date hereof,

and, upon or following any such termination or any such amended Merger
Agreement, Warburg receives any cash or non-cash consideration (the 'Alternative
Consideration') in respect of all or any portion of the Shares in connection
with (A) a Transaction Proposal for which definitive documentation has been
executed by all the parties to such transaction (the 'Alternative Transaction')
during the period commencing on the date hereof and ending nine months from the
date the Merger Agreement is terminated, or (B) an amended Merger Agreement,
Warburg shall promptly upon receipt of the Alternative Consideration pay to the
Purchaser or its designee on demand in cash, by wire transfer of same day funds
to an account designated by the Purchaser:
 
          (x) in the case of termination of the Merger Agreement in accordance
     with the above-referenced sections of the Merger Agreement, if the
     Alternative Consideration is greater than $26.50, but not greater than $30
     per Share, the excess of (x) such Alternative Consideration over $26.50
     multiplied by (y) the number of shares with respect to which Warburg
     received such Alternative Consideration; provided that (i) if the
     Alternative Consideration received by Warburg shall be securities listed on
     a national securities exchange or traded on the Nasdaq National Market
     ('Nasdaq'), the per share value of such consideration shall be equal to the
     average closing price per share listed on such national securities exchange
     or Nasdaq on the five trading days prior to the date such transaction is
     consum mated and (ii) if the consideration received by Warburg shall be in
     a form other than such listed securities, the per share value shall be
     determined in good faith as of the date such transaction is consummated by
     the Purchaser or its designee and Warburg, or, if the Purchaser or its
     designee and Warburg cannot reach agreement, by a nationally recognized
     investment banking firm reasonably ac ceptable to the parties; and
 
          (y) in the case of termination of the Merger Agreement in accordance
     with the above-referenced sections of the Merger Agreement, if the
     Alternative Consideration is greater than $30 per Share, the sum of (I) for
     the portion of such consideration not greater than $30 per Share, the
     amounts payable pursuant to subparagraph (a) hereof and (II) for the
     portion of such consideration exceeding $30 per Share, one half of such
     Alternative Consideration; provided that (i) if the Alternative
     Consideration received by Warburg shall be securities listed on a national
     securities exchange or traded on the Nasdaq, the per share value of such
     consideration shall be equal to the average closing price per share listed
     on such national securities exchange or Nasdaq on the five trading days
     prior to the date such transaction is consummated and (ii) if the
     consideration received by Warburg shall be in a form other than such listed
     securities, the per share value shall be determined in good faith as of the
     date such transaction is consummated by the Purchaser or its designee and
     Warburg, or, if the Purchaser or its designee and Warburg cannot reach
     agreement, by a nationally recognized investment banking firm reasonably
     acceptable to the parties;
 
          (z) in the case of an amended Merger Agreement, an amount equal to any
     and all Alternative Consideration above $26.50 per Share.
 
     (b) In connection with an Alternative Transaction, the Alternative
Consideration per Share to be received by the stockholders of the Company other
than Warburg shall not exceed by more than $.50 per share the Alternative

Consideration to be received by Warburg. Warburg shall not enter into any
agreement, arrangement or understanding with any Person the effect of which
would be inconsistent or violative of the provisions and agreement contained in
this Section 5(b).
 
6. AGREEMENT TO VOTE; PROXY.
 
     (a) Voting.  Warburg hereby agrees that, until the Termination Date (as
defined in Section 11), at any meeting of the stockholders of the Company or in
connection with any written consent of the stockholders of the Company, Warburg
shall vote (or cause to be voted) the Shares held of record or beneficially by
Warburg (i) in favor of the Merger, and each of the other actions contemplated
by the Merger Agreement and this Agreement and any actions required in
furtherance hereof and thereof; (ii) against any action or agreement that would
result
 
                                       4

<PAGE>

in a breach of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or this Agreement; and
(iii) except as specifically requested in writing by the Purchaser in advance,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (1) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries; (2) a sale, lease or transfer of a
material amount of assets of the Company or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (3) any material change in the present capitalization of the
company including any proposal to sell any equity interest in the Company or any
of its subsidiaries or any amendment of the Articles of Incorporation of the
Company; or (4) any material change in the Company's corporate structure or
business; or (d) any other action which is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, discourage or materially
adversely affect the Merger or the transactions contemplated by the Merger
Agreement or this Agreement. Warburg shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreement contained in this
Section 6(a).
 
     (b) Proxy.  WARBURG HEREBY GRANTS TO, AND APPOINTS, BARRY F. SCHWARTZ AND
JORAM C. SALIG IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF THE PURCHASER, AND
ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF THE PURCHASER,
AND ANY OTHER DESIGNEE OF THE PURCHASER, EACH OF THEM INDIVIDUALLY, WARBURG'S
IRREVOCABLE (UNTIL THE TERMINATION DATE) PROXY AND ATTORNEY-IN-FACT (WITH FULL
POWER OF SUBSTITUTION) TO VOTE THE SHARES AS INDICATED IN SECTION 6(a) ABOVE.
WARBURG INTENDS THIS PROXY TO BE IRREVOCABLE (UNTIL THE TERMINATION DATE) AND
COUPLED WITH AN INTEREST AND WILL TAKE SUCH FURTHER ACTION AND EXECUTE SUCH
OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND
HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY WARBURG WITH RESPECT TO WARBURG'S
SHARES.
 
     7. CERTAIN COVENANTS OF WARBURG. Except in accordance with the terms of

this Agreement, Warburg hereby covenants and agrees as follows:
 
          7.1 No Solicitation.  Prior to the Termination Date, Warburg shall
     not, directly or indirectly (including through advisors, agents or other
     intermediaries), solicit (including by way of furnishing information) or
     respond to any inquiries or the making of any proposal by any person or
     entity with respect to the Company that constitutes or could reasonably be
     expected to lead to an Alternative Transaction; and shall use its
     reasonable best efforts to cause any such party in possession of
     confidential information about the Company that was furnished by or on
     behalf of Warburg to return or destroy all such information in the
     possession of any such party (other than the Purchaser) or in the
     possession of any Representative of any such party, provided, however, that
     the foregoing shall not restrict Warburg or any of its representatives on
     the Board of Directors of the Company from taking actions to the same
     extent and in the same circumstances permitted for the Board and the
     Company by Section 5.9 of the Merger Agreement.
 
          7.2 Restriction on Transfer, Proxies and Noninterference; Restriction
     on Withdrawal.  Prior to the Termination Date, Warburg shall not, directly
     or indirectly (i) except pursuant to the terms of the Merger Agreement and
     to the Purchaser pursuant to this Agreement, offer for sale, sell,
     transfer, tender, pledge, encumber, assign or otherwise dis pose of,
     enforce or permit the execution of the provisions of any redemption
     agreement with the Company or enter into any contract, option or other
     arrangement or understanding with respect to or consent to the offer for
     sale, sale, transfer, tender, pledge, encumbrance, assignment or other
     disposition of, or exercise any discretionary powers to distribute, any or
     all of the Shares or any interest therein, including any trust income or
     principal, except in each case to a transferee who is or agrees to become
     bound by this Agreement, (ii) except as contemplated hereby, grant any
     proxies or powers of attorney with respect to any Shares, deposit any
     Shares into a voting trust or enter into a voting agreement with respect to
     any Shares or (iii) take any action that would make any representation or
     warranty of Warburg contained herein untrue or incorrect or would result in
     a breach by Warburg of its obligations under this Agreement or a breach by
     the Company of its obligations under the Merger Agreement.
 
                                       5

<PAGE>

          7.3 Redeemable Preferred Stock.  Immediately prior to the consummation
     of the Merger, Warburg shall exchange 88% of the Company Common Stock it
     beneficially owns for redeemable preferred stock of the Company (the
     'Redeemable Preferred Stock'), on the basis of 100 shares of Company Common
     Stock for each share of Redeemable Preferred Stock, redeemable at the
     option of the holder at $2,650 per share of Redeemable Preferred Stock, and
     shall surrender such Redeemable Preferred Stock for redemption immediately
     upon the consummation of the Merger; provided, however, that in the event
     the number of Cash Election Shares is less than the Cash Election Number
     (as each such term is defined in the Merger Agreement), immediately prior
     to the consummation of the Merger, Warburg shall also exchange for
     Redeemable Preferred Stock upon the same terms and conditions a number of

     shares of additional Company Common Stock (to the extent of Company Common
     Stock beneficially owned by it) equal to such deficiency; provided,
     further, that the number of Shares to be exchanged for Redeemable Preferred
     Stock, pursuant to the foregoing provisions of this Section 7.3, shall be
     reduced by the number, if any, of Purchaser Stock Purchase Shares (as
     defined below), rounded down to the nearest 100 Shares. Warburg shall elect
     to retain, in accordance with the terms of the Merger Agreement, the
     Company Common Stock not (i) exchanged for Redeemable Preferred Stock
     pursuant to this Section 7.3 or (ii) sold pursuant to Section 7.5.
 
          7.4 Proprietary Information.  Except as required by law or as
     contemplated by this Agreement, Warburg shall not, directly or indirectly,
     make use of or divulge or otherwise disclose to any Person other than the
     Purchaser, any trade secret, confidential information or other proprietary
     information or data (including any financial data, mailing lists, customer
     lists or employee data or records) concerning the business or policies of
     the Company or its subsidiaries that Warburg may have learned, directly or
     indirectly, as a stockholder, employee, officer or director of the Company
     or any of its subsidiaries.
 
          7.5  Purchaser Stock Purchase
 
          (a) Immediately prior to the consummation of the Merger, Warburg shall
     sell, transfer, assign and deliver the Purchaser Stock Purchase Shares, if
     any, to Purchaser or its designee, and Purchaser or its designee shall
     purchase the Purchaser Stock Purchase Shares, if any, from Warburg for
     $26.50 per Share, payable by wire transfer of same day funds; provided,
     that all conditions to the Merger contained in the Merger Agreement have
     been either satisfied or waived.
 
          (b) In the event that the Designated Number of Common Shares
     multiplied by the Designated Per Share Purchase Price (as each such term is
     defined in the Merger Agreement) shall equal less than $154,000,000, a
     number of Shares calculated by dividing such deficiency by $26.50 (rounded
     up to the nearest whole number) shall constitute the 'Purchaser Stock
     Purchase Shares'.
 
     8. CERTAIN COVENANTS OF THE PURCHASER AND THE COMPANY. Except in accordance
with the terms of this Agreement, the Purchaser and the Company hereby severally
and not jointly covenant and agree as follows:
 
          8.1  Tag-Along Rights.  If, at any time on or prior to December 31,
     1999, the Purchaser intends to sell ('Sale'), in a single transaction or a
     series of related transactions, more than 25% of shares of Company Common
     Stock it beneficially owns other than (i) to any of its Affiliates who
     agree to be bound by this Merger Agreement, (ii) pursuant to a public
     offering pursuant to an effective registration statement under the
     Securities Act of 1933, as amended (the 'Securities Act') or (iii) pursuant
     to a merger or similar acquisition transaction, in which all the Company
     Common Stock is acquired, the Purchaser shall notify all other stockholders
     of the Company (the 'Public Stockholders'), in writing, of such proposed
     Sale and its terms and conditions. Within twenty (20) business days of the
     date of such notice, each Public Stockholder shall notify the Purchaser if
     it elects to participate in such Sale. Any Public Stockholder that fails to

     notify the Purchaser within such twenty (20) business day period will be
     deemed to have waived its rights hereunder. Each Public Stockholder that so
     notifies the Purchaser shall have the right to sell, at the same price and
     on the same terms and conditions as the Purchaser, an amount of shares of
     Company Common Stock equal to the number of shares of Company Common Stock
     the third party actually proposes to purchase multiplied by a fraction, the
     numerator of which shall be the number of shares of Company Common Stock
     issued and owned by such Public Stockholder and the denominator of which
     shall be the aggregate number of shares of Company Common Stock issued and
     owned by the Purchaser and each
 
                                       6

<PAGE>

     Public Stockholder exercising its rights under this Section 8.1.
     Notwithstanding anything contained in this Section 8.1, in the event that
     all or a portion of the purchase price consists of securities and the sale
     of such securities to the Public Stockholders would require either a
     registration under the Securities Act, or the preparation of a disclosure
     document pursuant to Regulation D under the Securities Act (or any
     successor regulation) or a similar provision of any state securities law,
     then, at the option of the Purchaser, any one or more of the Public
     Stockholders may receive, in lieu of such securities, the fair market value
     of such securities in cash, as determined in good faith by unanimous vote
     of the Board of Directors of the Company.
 
          8.2  Independent Directors.  From and after the Effective Time of the
     Merger until the date on which the Company shall no longer have any Public
     Stockholders, the Purchaser and the Company shall take all action within
     their respective power to include on the Board of Directors of the Company
     two directors, each of whom is (i) considered to be an independent director
     pursuant to the rules contained in the NYSE Listed Company Manual and (ii)
     is not an officer or employee of any company affiliated with the Purchaser.
 
     9. FURTHER ASSURANCES. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
 
     10. STOP TRANSFER. Warburg agrees with, and covenants to, the Purchaser
that Warburg shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of Warburg's Shares, unless such transfer is made in compliance
with this Agreement.
 
     11. TERMINATION. The obligations under Sections 6 and 7 hereof shall
terminate upon the first to occur of (i) the Effective Time of the Merger and
(ii) the date the Merger Agreement is terminated in accordance with its terms
(the 'Termination Date'). Except as set forth in this Section 11, all other
agreements and obligations of the parties hereto shall survive the Effective
Time of the Merger and/or the Termination Date, as applicable, and in the case
of Section 5 hereof, to the extent set forth in such section.

 
     12. RESTRICTIONS ON TRANSFER.
 
          12.1  Transfer of Shares.  (a) During the period of time between (i)
     the Effective Time of the Merger Agreement and (ii) the expiration of the
     Option Period, Warburg shall not offer for sale, sell, transfer, tender,
     pledge, encumber, assign or otherwise dispose of, place in trust (voting or
     otherwise), enforce or permit the execution of the provisions of any
     redemption agreement with the Company or enter into any contract, option or
     other arrangement or understanding with respect to or consent to the offer
     for sale, sale, transfer, tender, pledge, encumbrance, assignment or other
     disposition of, or exercise any discretionary powers to distribute, any or
     all of Warburg's Shares, except for transfers made both in compliance with
     all federal and state securities laws and pursuant to the terms hereof.
 
          12.2   Permitted Transfers.  Notwithstanding any provision in this
     Section to the contrary, the Shares may be transferred (a) to an Affiliate
     of Warburg who agrees to be bound by this Agreement or (b) to any partner
     of (i) Warburg or (ii) an Affiliate of Warburg, who, in each case, agrees
     to be bound by this Agreement.
 
     13. MISCELLANEOUS.
 
          13.1  Entire Agreement; Assignment.  This Agreement (i) constitutes
     the entire agreement between the parties with respect to the subject matter
     hereof and supersedes all other prior agreements and understandings, both
     written and oral, between the parties with respect to the subject matter
     hereof and (ii) shall not be assigned by operation of law or otherwise
     without the prior written consent of the other party.
 
          13.2  Amendments.  This Agreement may not be modified, amended,
     altered or supplemented, except upon the execution and delivery of a
     written agreement executed by the parties hereto.
 
          13.3  Notices.  All notices, requests, claims, demands and other
     communications hereunder shall be in writing and shall be given (and shall
     be deemed to have been duly received if so given) by hand delivery,
     telegram, telex or telecopy, or by mail (registered or certified mail,
     postage prepaid, return receipt requested)
 
                                       7

<PAGE>

     or by any courier service, such as Federal Express, providing proof of
     delivery. All communications hereunder shall be delivered to the respective
     parties at the following addresses:
 

If to the Company:     Panavision Inc.
                       885 Third Avenue
                       Suite 3020
                       New York, New York 10022
                       Attn: William C. Scott

                       Telecopier: (212) 688-6373
 

If to Warburg:         Warburg, Pincus Capital Company, L.P.
                       c/o E.M. Warburg, Pincus & Co., LLC
                       466 Lexington Avenue
                       New York, New York 10019
                       Attn: Sidney Lapidus
                       Telecopier: (212) 878-6162
 

copy to:               Willkie Farr & Gallagher
                       One Citicorp Center
                       153 East 53rd Street
                       New York, New York 10022-4669
                       Attention: Christopher E.
                       Manno, Esq.
                       Telecopier Number: (212) 821-8111
 

If to the Purchaser:   Mafco Holdings Inc.
                       625 Madison Avenue
                       New York, New York 10021
                       Attention:
                       Telecopier Number: (212) 867-5428
 

copy to:               Skadden, Arps, Slate, Meagher & Flom LLP
                       919 Third Avenue
                       New York, New York 10022
                       Attention: Alan C. Myers, Esq.
                       Telecopier Number: (212) 735-2000

 
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
 
          13.4  Governing Law.  This Agreement shall be governed by and
     construed in accordance with the laws of the State of Delaware, regardless
     of the laws that might otherwise govern under applicable principles of
     conflicts of laws thereof.
 
          13.5  Enforcement.  The parties agree that irreparable damage would
     occur in the event that any of the provisions of this Agreement were not
     performed in accordance with their specific terms or were otherwise
     breached. It is accordingly agreed that the parties shall be entitled to an
     injunction or injunctions to prevent breaches of this Agreement and to
     enforce specifically the terms and provisions of this Agreement.
 
          13.6  Counterparts.  This Agreement may be executed in two or more
     counterparts, each of which shall be deemed to be an original, but both of
     which shall constitute one and the same Agreement.
 
          13.7  Descriptive Headings.  The descriptive headings used herein are

     inserted for convenience of reference only and are not intended to be part
     of or to affect the meaning or interpretation of this Agreement.
 
          13.8  Severability.  Whenever possible, each provision or portion of
     any provision of this Agreement will be interpreted in such manner as to be
     effective and valid under applicable law but if any provision or portion of
     any provision of this Agreement is held to be invalid, illegal or
     unenforceable in any respect
 
                                       8

<PAGE>

     under any applicable law or rule in any jurisdiction, such invalidity,
     illegality or unenforceability will not affect any other provision or
     portion of any provision in such jurisdiction, and this Agreement will be
     reformed, construed and enforced in such jurisdiction as if such invalid,
     illegal or unenforceable provision or portion of any provision had never
     been contained herein.
 
          13.9 Definitions; Construction.  For purposes of this Agreement:
 
          (a) 'beneficially own' or 'beneficial ownership' with respect to any
     securities shall mean having 'beneficial ownership' of such securities (as
     determined pursuant to Rule 13d-3 under the Exchange Act), including
     pursuant to any agreement, arrangement or understanding, whether or not in
     writing. Without duplicative counting of the same securities by the same
     holder, securities Beneficially owned by a Person shall include securities
     Beneficially owned by all other Persons with whom such Person would
     constitute a 'group' as described in Section 13(d)(3) of the Exchange Act.
 
          (b) 'Person' shall mean an individual, corporation, partnership, joint
     venture, association, trust, unincorporated organization or other entity.
 
          (c) In the event of a stock dividend or distribution, or any change in
     the Company Common Stock by reason of any stock dividend, split-up,
     recapitalization, combination, exchange of shares or the like, the term
     'Shares' shall be deemed to refer to and include the Shares as well as all
     such stock dividends and distributions and any shares into which or for
     which any or all of the Shares may be changed or exchanged.
 
          13.10 Stockholder Capacity.  Notwithstanding anything herein to the
     contrary, nothing set forth herein shall in any way restrict any director
     in the exercise of his or her fiduciary duties as a director of the
     Company.
 
          13.11 Adjustment Upon Changes in Capitalization.  In the event of any
     change in the Common Stock by reason of any stock dividend, extraordinary
     dividend or distribution, split-up, recapitalization, combination, exchange
     of shares or the like, the number of Shares subject to Sections 3 and 4
     hereof, and the purchase prices therefor, shall be appropriately adjusted.
 
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

 

                                          PANAVISION INC.

                                          By:         /s/ WILLIAM C. SCOTT
                                             -----------------------------------
                                             Name: W.C. Scott
                                             Title: Chairman of the Board
                                                    and Chief Executive 
                                                    Officer
 
                                          MAFCO HOLDINGS INC.

                                          By:          /s/ HOWARD GITTIS
                                             -----------------------------------
                                             Name: Howard Gittis
                                             Title: Vice Chairman
 
                                          WARBURG, PINCUS CAPITAL COMPANY, L.P.

                                          By:   WARBURG, PINCUS & CO., ITS
                                                 GENERAL PARTNER 

                                          By:          /s/ SIDNEY LAPIDUS
                                             -----------------------------------
                                             Name:  Sidney Lapidus
                                             Title: Partner
 
                                       9

<PAGE>
                                   ANNEX III


<PAGE>

PERSONAL AND CONFIDENTIAL
 
December 18, 1997
 
Board of Directors
Panavision Inc.
885 3rd Avenue, Suite 3020
New York, NY 10022
 
Ladies and Gentlemen:
 
     You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $.0l
per share (the 'Shares'), of Panavision Inc. (the 'Company') other than Warburg,
Pincus Capital Company, L.P. ('Warburg') and Mafco Holdings Inc. ('Mafco') (such
holders, excluding Warburg and Mafco, the 'Holders') of the aggregate
consideration to be received by the Holders pursuant to the Agreement of
Recapitalization and Merger, dated as of December 18, 1997 (the 'Agreement'),
among PX Holding Corporation ('Purchaser'), a newly formed corporation organized
at the direction of Mafco, PX Merger Corporation ('Newco'), a wholly owned
subsidiary of Purchaser, and the Company. The obligations of Newco and the
Purchaser under the Agreement are guaranteed by Mafco. The Agreement provides
for the merger (the 'Merger') of Newco with and into the Company pursuant to
which each Holder of a Share shall be entitled either (i) to retain such Share
or (ii) to receive $27.00 in cash for such Share, subject to certain election
and proration procedures set forth in the Agreement, as to which we express no
view. For purposes of this opinion we have assumed that the Holders will receive
cash for approximately 88% of their Shares and retain the balance of such Shares
(the 'Aggregate Consideration').
 
     Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having provided certain investment banking services to
the Company from time to time, including having acted as managing underwriter of
an initial public offering of the Shares in November 1996, and having acted as
its financial advisor in connection with, and having participated in certain of
the negotiations leading to, the Agreement. We have also provided investment
banking services from time to time to Mafco and its affiliates and may continue
to do so in the future.
 
     In connection with this opinion, we have reviewed, among other things, the
Agreement; the Voting and Stockholders Agreement, dated December 18, 1997 (the
'Stockholders Agreement') entered into by the Company, Mafco and Warburg (the
largest stockholder of the Company); the Annual Report to Stockholders for the
year ended December 31, 1996 and the Annual Report on Form 10-K of the Company

for the three years ended December 31, 1996; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management
without, and after, giving effect to the Merger. We also have held discussions
with members of the senior management of the Company regarding its past and
current business operations, financial condition and future prospects. In
addition, we have reviewed the reported price and trading activity for the
Shares, reviewed the financial terms of certain recent relevant business
combinations and performed such other studies and analyses as we considered
appropriate.
 
     We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed with your consent that the financial forecasts provided to us and
discussed with us with respect to the Company after giving effect to the Merger,
including, without limitation, the Company's capital structure following the
Merger, have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the management of the Company and that such
forecasts will be realized in the amounts and at the times contemplated thereby.
We have also assumed with your consent that the Merger will be treated as a
recapitalization in accordance with generally accepted accounting principles. We
have not made an independent evaluation or appraisal with respect to the assets
and liabilities of the Company or concerning the solvency or fair value of the
Company for any state law or federal bankruptcy law purposes, and we have not
been furnished with

<PAGE>

any such evaluation or appraisal. We were not requested to solicit, and did not
solicit, interest from other parties with respect to an acquisition of or other
business combination with the Company. We are not expressing any opinion herein
on the prices at which the Shares are likely to trade following the consummation
of the Merger, which may vary depending upon, among other factors, changes in
business, market or general economic conditions, liquidity and other factors
that generally influence the price of securities. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transaction contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any Holder should vote with respect to such transaction
or what election any Holder should make in connection with the Merger.
 
     The Stockholders Agreement contains, among other things, certain agreements
of Mafco and Warburg with respect to (a) put and call options that could result
in purchases and sales of Shares between those parties following the Merger, (b)
the allocation between those parties of any consideration received by Warburg in
alternative transactions and (c) participation by other shareholders in future
dispositions of Shares by Mafco. The Stockholders Agreement also contains
agreements by Warburg to vote its Shares in favor of the Merger and not to
dispose of any Shares during the two years after the effective time of the
Merger, subject to certain exceptions contained therein.
 
     Based upon and subject to the foregoing and based upon such other matters

as we consider relevant, it is our opinion that as of the date hereof the
Aggregate Consideration to be received by the Holders pursuant to the Agreement
is fair from a financial point of view to such Holders.
 
Very truly yours,



GOLDMAN, SACHS & CO.


<PAGE>

                                    PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS
 
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Company's Restated Certificate of Incorporation (the 'Certificate of
Incorporation') provides that the Company shall indemnify each person who is or
was a director, officer or employee of the Company to the fullest extent
permitted under Section 145 of the Delaware General Corporation Law (the
'DGCL'). Section 145 of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise. A
corporation may indemnify such person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
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 corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that such person's conduct was unlawful. A corporation may, in advance of the
final disposition of any civil, criminal, administrative or investigative
action, suit or proceeding, pay the expenses (including attorneys' fees)
incurred by any officer or director in defending such action, provided that such
director or officer undertakes to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation.
 
     Section 145 of the DGCL also provides that a corporation may indemnify any
person who was or is a party or threatened to be made a party, to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted under similar standards, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
 
     Section 145 of the DGCL also provides that to the extent that a director,
officer, employee or agent of a corporation is successful on the merits or
otherwise in the defense of any action referred to above, or in defense of any
claim, issue or matter therein, the corporation must indemnify such person

against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
 
     Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of a 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 directors' 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 DGCL
(regarding certain illegal distributions) or (iv) for any transaction from which
the director derived an improper personal benefit. The Registrant's Certificate
of Incorporation provides that the personal liability of the Registrant's
directors to the Registrant or any of its stockholders for monetary damages for
breach of fiduciary duty by such director as a director is limited to the
fullest extent permitted by Delaware law.
 
     The Registrant also maintains directors' and officers' liability insurance
covering certain liabilities that may be incurred by directors and officers of
the Registrant in the performance of their duties.
 
                                      II-1

<PAGE>

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
     (a) Exhibits
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER    DESCRIPTION
- --------   ----------------------------------------------------------------------------------------------------------
<S>        <C>   <C>
 2.1        --   Agreement of Recapitalization and Merger, dated as of December 18, 1997, by and among PX Holding
                 Corporation, PX Merger Corporation and Panavision Inc. (included as Annex I to the Proxy Statement).
 2.2        --   Amended and Restated Voting and Stockholders Agreement, dated as of April 16, 1998, by and among
                 Warburg Pincus Capital Company, L.P., Panavision Inc. and Mafco Holdings Inc. (included as Annex II
                 to the Proxy Statement).
 3.1*       --   Restated Certificate of Incorporation.
 3.2*       --   Restated By-Laws.
 4*         --   Specimen of the Company's Common Stock Certificate.
 5          --   Opinion of Willkie Farr & Gallagher as to the legality of the securities being registered.
 8          --   Opinion of Willkie Farr & Gallagher as to certain tax matters.
10.1*       --   Amended and Restated Stockholders Agreement, dated as of June 12, 1996.
10.2*       --   Restated and Amended Credit Agreement, dated September 10, 1996, among Panavision International,
                 L.P., the subsidiary guarantors and the lenders listed therein, and The Chase Manhattan Bank, as
                 Administrative Agent.
10.3*       --   1996 Stock Option Plan.
10.4*       --   Employment Agreement, dated as of June 12, 1996, between the Company and William C. Scott.
10.5*       --   Lease, dated June 13, 1995, between the Company and Trizec Warner Inc.
10.6*       --   Executive Incentive Compensation Plan.
10.7**      --   Second Restated and Amended Credit Agreement, dated December 5, 1996 among Panavision International,

                 L.P., the subsidiary guarantors and the lenders listed therein, and The Chase Manhattan Bank, as
                 Administrative Agent.
10.8**      --   First Amended and Restated Stock Option Plan.
10.9***     --   Agreement, dated May 18, 1997, among Visual Action Holdings plc, Panavision Europe Limited and the
                 Company.
10.10***    --   Agreement, dated May 18, 1997, between Visual Action Holdings plc and the Company.
10.11***    --   Stock Purchase Agreement, dated May 18, 1997, among Visual Action Holdings, Inc., Visual Action
                 Holdings plc and the Company.
10.12***    --   Credit Agreement, dated June 5, 1997, among Panavision International, L.P., the subsidiary
                 guarantors and the lenders listed therein, and The Chase Manhattan Bank, as Administrative Agent.
21***       --   Subsidiaries of the Company.
23.1        --   Consent of Ernst & Young LLP, Independent Auditors.
23.2        --   Consent of Willkie Farr & Gallagher (included in Exhibit 5).
23.3        --   Consent of Willkie Farr & Gallagher (included in Exhibit 8).
23.4        --   Consent of Murray, Devine & Co.
24.1        --   Power of Attorney (included on the signature page of this Registration Statement).
99.1*       --   Consent of Martin D. Payson to be named as a director of the Company.
99.2        --   Consent of Ronald O. Perelman to be named as a director of the Company.
99.3        --   Consent of Howard Gittis to be named as a director of the Company.
</TABLE>
 
- ------------------
  * Incorporated herein by reference to the identically numbered exhibit to the
    Company's Registration Statement on Form S-1, Registration No. 333-12235.
 
 ** Incorporated herein by reference to the identically numbered exhibit to the
    Company's Annual Report on Form 10-K for the year ended December 31, 1996.
 
*** Incorporated herein by reference to the identically numbered exhibit to the
    Company's Annual Report on Form 10-K for the year ended December 31, 1997.
 
                                      II-2

<PAGE>

 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER    DESCRIPTION
- --------   ----------------------------------------------------------------------------------------------------------
<S>        <C>   <C>
99.4        --   Consent of James R. Maher to be named as a director of the Company.
99.5        --   Consent of Joseph P. Page to be named as a director of the Company.
99.6        --   Consent of Kenneth Ziffren to be named as a director of the Company.
99.7        --   Opinion of Goldman, Sachs & Co. (included as Annex III to the Proxy Statement).
99.8        --   Form of Proxy Card to be used in connection with the Merger.
99.9        --   Form of Form of Election to be used in connection with the Merger.
99.10       --   Form of Letter of Transmittal to be used in connection with the Merger.
99.11       --   Form of Notice of Guaranteed Delivery.
99.12       --   Form of Solvency Opinion.
</TABLE>
 
     (b) Financial Statement Schedules.

 
     (c) A copy of the opinion of Goldman, Sachs & Co. has been filed as exhibit
99.7 hereto.
 
ITEM 22. 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 and 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.
 
     (2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment 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. To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
 
     The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
 

     The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the immediately preceding undertaking, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of
 
                                      II-3

<PAGE>

determining any liability under the Securities Act, each such post-effective
amendment 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.
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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.
 
     The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement throughout the
date of responding to the request.
 
     The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
 
                                      II-4

<PAGE>

                                   SIGNATURES
 
     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK ON MAY 4, 1998.
 
                                          PANAVISION INC.
                                          (Registrant)
 
                                          By:      /s/ William C. Scott
                                             -----------------------------------
                                                     William C. Scott
                                                Chief Executive Officer and
                                            Chairman of the Board of Directors
 
                               POWER OF ATTORNEY
 
     Each person whose signature appears below hereby constitutes and appoints
William C. Scott and Jeffrey J. Marcketta, and each of them, as their
attorneys-in-fact, with full power of substitution and resubstitution, for such
person and in such person's name, place and stead, in any and all capacities, to
execute one or more amendments (including post-effective amendments) to this
Registration Statement and to file any such amendment, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their 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
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED.
 
<TABLE>
<CAPTION>
                SIGNATURE                                         TITLE                             DATE
- ------------------------------------------  -------------------------------------------------   -------------
<S>                                         <C>                                                 <C>
          /s/ William C. Scott              Chairman of the Board of Directors and                May 4, 1998
- ------------------------------------------  Chief Executive Officer (Principal Executive
             William C. Scott               Officer)
 
           /s/ John S. Farrand              President and Chief Operating Officer and             May 4, 1998
- ------------------------------------------  Director (Principal Executive Officer)
             John S. Farrand
 
         /s/ Jeffrey J. Marcketta           Executive Vice President and Chief Financial          May 4, 1998
- ------------------------------------------  Officer (Principal Financial Officer)
           Jeffrey J. Marcketta

 
      /s/ Christopher M.R. Phillips         Controller and Secretary (Principal Accounting        May 4, 1998
- ------------------------------------------  Officer)
        Christopher M.R. Phillips
 
            /s/ Sidney Lapidus              Director                                              May 4, 1998
- ------------------------------------------
              Sidney Lapidus
 
           /s/ Martin D. Payson             Director                                              May 4, 1998
- ------------------------------------------
             Martin D. Payson
 
          /s/ Willis G. Ryckman             Director                                              May 4, 1998
- ------------------------------------------
            Willis G. Ryckman
 
           /s/ Joanne R. Wenig              Director                                              May 4, 1998
- ------------------------------------------
             Joanne R. Wenig
</TABLE>
 
                                      II-5

<PAGE>

                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT                                                                                                     SEQUENTIAL
 NUMBER    DESCRIPTION                                                                                       PAGE NO.
- --------   ----------------------------------------------------------------------------------------------   ----------
<S>        <C>   <C>                                                                                        <C> 
 2.1        --   Agreement of Recapitalization and Merger, dated as of December 18, 1997, by and among PX
                 Holding Corporation, PX Merger Corporation and Panavision Inc. (included as Annex I to
                 the Proxy Statement).
 
 2.2        --   Amended and Restated Voting and Stockholders Agreement, dated as of April 16, 1998, by
                 and among Warburg Pincus Capital Company, L.P., Panavision Inc. and Mafco Holdings Inc.
                 (included as Annex II to the Proxy Statement).
 
 3.1*       --   Restated Certificate of Incorporation.
 
 3.2*       --   Restated By-Laws.
 
 4*         --   Specimen of the Company's Common Stock Certificate.
 
 5          --   Opinion of Willkie Farr & Gallagher as to the legality of the securities being
                 registered.
 
 8          --   Opinion of Willkie Farr & Gallagher as to certain tax matters.
 
10.1*       --   Amended and Restated Stockholders Agreement, dated as of June 12, 1996.
 
10.2*       --   Restated and Amended Credit Agreement, dated September 10, 1996, among Panavision
                 International, L.P., the subsidiary guarantors and the lenders listed therein, and The
                 Chase Manhattan Bank, as Administrative Agent.
 
10.3*       --   1996 Stock Option Plan.
 
10.4*       --   Employment Agreement, dated as of June 12, 1996, between the Company and William C.
                 Scott.
 
10.5*       --   Lease, dated June 13, 1995, between the Company and Trizec Warner Inc.
 
10.6*       --   Executive Incentive Compensation Plan.
 
10.7**      --   Second Restated and Amended Credit Agreement, dated December 5, 1996 among Panavision
                 International, L.P., the subsidiary guarantors and the lenders listed therein, and The
                 Chase Manhattan Bank, as Administrative Agent.
 
10.8**      --   First Amended and Restated Stock Option Plan.
 
10.9***     --   Agreement, dated May 18, 1997, among Visual Action Holdings plc, Panavision Europe
                 Limited and the Company.
 
10.10***    --   Agreement, dated May 18, 1997, between Visual Action Holdings plc and the Company.

 
10.11***    --   Stock Purchase Agreement, dated May 18, 1997, among Visual Action Holdings, Inc., Visual
                 Action Holdings plc and the Company.
 
10.12***    --   Credit Agreement, dated June 5, 1997, among Panavision International, L.P., the
                 subsidiary guarantors and the lenders listed therein, and The Chase Manhattan Bank, as
                 Administrative Agent.
</TABLE>
 
- ------------------
 
  * Incorporated herein by reference to the identically numbered exhibit to the
    Company's Registration Statement on Form S-1, Registration No. 333-12235.
 
 ** Incorporated herein by reference to the identically numbered exhibit to the
    Company's Annual Report on Form 10-K for the year ended December 31, 1996.
 
*** Incorporated herein by reference to the identically numbered exhibit to the
    Company's Annual Report on Form 10-K for the year ended December 31, 1997.
<PAGE>
 
<TABLE>
<CAPTION>
EXHIBIT                                                                                                     SEQUENTIAL
 NUMBER    DESCRIPTION                                                                                       PAGE NO.
- --------   ----------------------------------------------------------------------------------------------   ----------
<S>        <C>   <C>                                                                                        <C>
21***       --   Subsidiaries of the Company.
 
23.1        --   Consent of Ernst & Young LLP, Independent Auditors.
 
23.2        --   Consent of Willkie Farr & Gallagher (included in Exhibit 5).
 
23.3        --   Consent of Willkie Farr & Gallagher (included in Exhibit 8).
 
23.4        --   Consent of Murray, Devine & Co.
 
24.1        --   Power of Attorney (included on the signature page of this Registration Statement).
 
99.1*       --   Consent of Martin D. Payson to be named as a director of the Company.
 
99.2        --   Consent of Ronald O. Perelman to be named as a director of the Company.
 
99.3        --   Consent of Howard Gittis to be named as a director of the Company.
 
99.4        --   Consent of James R. Maher to be named as a director of the Company.
 
99.5        --   Consent of Joseph P. Page to be named as a director of the Company.
 
99.6        --   Consent of Kenneth Ziffren to be named as a director of the Company.
 
99.7        --   Opinion of Goldman, Sachs & Co. (included as Annex III to the Proxy Statement).
 
99.8        --   Form of Proxy Card to be used in connection with the Merger.

 
99.9        --   Form of Form of Election to be used in connection with the Merger.
 
99.10       --   Form of Letter of Transmittal to be used in connection with the Merger.
 
99.11       --   Form of Notice of Guaranteed Delivery.
 
99.12       --   Form of Solvency Opinion.
</TABLE>
 
- ------------------
 
  * Incorporated herein by reference to the identically numbered exhibit to the
    Company's Registration Statement on Form S-1, Registration No. 333-12235.
 
 ** Incorporated herein by reference to the identically numbered exhibit to the
    Company's Annual Report on Form 10-K for the year ended December 31, 1996.
 
*** Incorporated herein by reference to the identically numbered exhibit to the
    Company's Annual Report on Form 10-K for the year ended December 31, 1997.



<PAGE>

                   [Letterhead of Willkie Farr & Gallagher]

May 4, 1998

Panavision Inc.
6219 DeSoto Avenue
Woodland Hills, California  91367

Ladies & Gentlemen:

We have acted as special counsel to Panavision Inc., a Delaware corporation
(the "Company"), in connection with various legal matters relating to the
filing by the Company with the Securities and Exchange Commission (the
"Commission"), of a Registration Statement on Form S-4 (the "Registration
Statement"), under the Securities Act of 1933, as amended, relating to, among
other things, the proposed merger of PX Merger Corporation, a Delaware
corporation, and wholly owned subsidiary of PX Holding Corporation, a Delaware
corporation ("PX Holding") with and into the Company (the "Merger"), pursuant
to the Agreement of Recapitalization and Merger between PX Holding
Corporation, PX Merger Corporation and Panavision Inc., dated as of December
18, 1997 (the "Recapitalization Agreement"). Pursuant to the Merger, each
share of the Company's common stock, $.01 par value per share ("Panavision
Common Stock" or "Shares"), issued and outstanding immediately prior to the
effective time of the Merger (other than shares of Panavision Common Stock
held by Warburg, Pincus Capital Company, L.P., a Delaware limited partnership
("Warburg")) will be converted at the election of the holder into either (a)
the right to receive $27.00 in cash or (b) the right to retain one share of
Panavision Common Stock, on the terms and subject to the conditions set forth
in the Recapitalization Agreement.

Pursuant to the Amended and Restated Voting and Stockholders Agreement, dated as
of April 16, 1998 (the "Stockholders Agreement"), by and among Warburg, Mafco
Holdings Inc., a Delaware corporation ("Mafco") and Panavision Inc., Warburg has
agreed to exchange 11,190,960 shares of Panavision Common Stock, representing
88% of the Panavision Common Stock that it owns, for Series A redeemable
preferred stock of the Company (the "Redeemable Preferred Stock"), redeemable
immediately upon consummation of the Merger at a price equivalent to $26.50 per
share of



<PAGE>

Panavision Inc.
May 4, 1998
Page 2

Panavision Common Stock on the terms and subject to the conditions set forth
in the Stockholders Agreement.

We have examined and relied upon such records, documents and other instruments
as we have deemed relevant and necessary as the basis for this opinion and
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
We have also assumed, with your permission, that (i) all outstanding Shares
issued pursuant to the exercise of options have been, and all Shares to be
issued after the date hereof and prior to the effective time of the Merger
pursuant to the exercise of outstanding options, will be, issued in accordance
with the terms and provisions of the option agreement governing such issuance
and that such agreement is in the form approved by the Board of Directors or
an appropriately authorized committee thereof and (ii) upon the exercise of
all such options and warrants, the Company received or, if exercised after the
date hereof, will receive, the consideration provided for in the applicable
option agreement. As to various questions of fact material to this opinion, we
have examined and relied upon, to the extent we deemed such reliance proper,
representations, corporate records, agreements, documents and other
instruments, certificates or comparable documents of public officials and of
officers and representatives of the Company.

Based upon and subject to the foregoing, we are of the opinion that both the
Redeemable Preferred Stock issued to Warburg pursuant to the Stockholders
Agreement and the shares of Panavision Common Stock to be retained by election
of the holder thereof, in the manner and on the terms described in the
Registration Statement and the Recapitalization Agreement have been or, if
issued after the date hereof pursuant to outstanding options, will be, duly
authorized, validly issued, fully paid, and nonassessable under the General
Corporation Law of the State of Delaware as in effect on this date.

This opinion is limited to the laws of the State of New York, the General
Corporation Law of the State of Delaware and the federal laws of the United
States typically applicable to transactions contemplated by the
Recapitalization Agreement, and we do not express any opinion with respect to
the laws of any other country, state or jurisdiction.


<PAGE>

Panavision Inc.
May 4, 1998
Page 3

This opinion letter is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated.

This letter speaks only as of the date hereof and is limited to present
statutes, regulations and administrative and judicial interpretations. We
undertake no responsibility to update or supplement this letter after the date
hereof.

We consent to the filing of this opinion as an exhibit to the Registration
Statement or any amendment thereto and to the use of our name under the
heading "Legal Opinions" in the Proxy Statement included in the Registration
Statement. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Commission.

Very truly yours,

/s/  Willkie Farr & Gallagher
- -----------------------------



<PAGE>

                   [Letterhead of Willkie Farr & Gallagher]

May 4, 1998

Panavision Inc.
6219 DeSoto Avenue
Woodland Hills, CA  91367

         Re:      Registration Statement on Form S-4

Ladies and Gentlemen:

You have requested our opinion as to the material United States federal income
tax consequences applicable to the merger (the "Merger") between Panavision
Inc. and PX Merger Corporation, both Delaware corporations, as more fully
described in the above-referenced Registration Statement and the exhibits
thereto filed with the Securities and Exchange Commission (the "Registration
Statement"). Capitalized terms not defined herein have the meanings ascribed
to them in the Registration Statement.

Based upon and subject to the facts as set forth in the Registration
Statement, we hereby confirm that our opinion set forth under the heading
"Certain Federal Income Tax Consequences" in the Proxy Statement/Prospectus
included in the Registration Statement addresses the material United States
federal income tax matters and consequences generally applicable to the
Merger, under currently applicable law, subject to the qualifications stated
in the Proxy Statement/Prospectus.

This opinion expresses our views as to the United States federal income tax
laws in effect as of the date hereof, including the Internal Revenue Code of
1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practice of the IRS,
all of which are subject to change either prospectively or retroactively.
Also, any variation or difference from the facts as set forth in the
Registration Statement and incorporated herein might affect the conclusion
stated herein.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the headings "The
Merger--Certain Federal Income Tax Consequences" and "Independent Accountants
and Legal Opinions" in the Proxy Statement/Prospectus included in the
Registration Statement. In giving this


<PAGE>

Panavision Inc.
May 4, 1998
Page 2

consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Commission.

Very truly yours,

/s/  Willkie Farr & Gallagher
- -----------------------------



<PAGE>

              CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

         We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related Prospectus of Panavision Inc.
for the registration of 6,211,500 shares of its common stock and to the
incorporation by reference therein of our report dated February 13, 1998, with
respect to the consolidated financial statements and schedule of Panavision Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1997,
filed with the Securities and Exchange Commission.


                                                  Ernst & Young LLP
Los Angeles, California
May 1, 1998



<PAGE>

                                                              April 16, 1998

PANAVISION INC.

6219 De Soto Avenue
Woodland Hills, CA  91367

Dear Sirs:

Attached hereto is a draft of our opinion letter (the "Opinion"), dated the
date hereof, addressed to the Boards of Directors of PX Holding Corporation
("Holdings") and Panavision Inc. ("Panavision").

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the headings "The
Merger-The Solvency Opinion" and in the Proxy Statement/Prospectus included in
the Registration Statement. In giving this consent we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission


                                        Very truly yours,

                                        /s/ Murray, Devine & Co., Inc.
                                            MURRAY, DEVINE & CO., INC.


<PAGE>

                       CONSENT TO BE NAMED AS A DIRECTOR

         I, Ronald O. Perelman, hereby consent to be a director of Panavision
Inc., a Delaware corporation (the "Company"), and to be named as a director in
the Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission by the Company.

Dated:  February 4, 1998                          /s/ Ronald O. Perelman
                                                  ----------------------
                                                  Ronald O. Perelman




<PAGE>

                       CONSENT TO BE NAMED AS A DIRECTOR

         I, Howard Gittis, hereby consent to be a director of Panavision Inc.,
a Delaware corporation (the "Company"), and to be named as a director in the
Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission by the Company.

Dated:  February 4, 1998                          /s/  Howard Gittis
                                                  ------------------
                                                  Howard Gittis


<PAGE>

                       CONSENT TO BE NAMED AS A DIRECTOR

         I, James R. Maher, hereby consent to be a director of Panavision
Inc., a Delaware corporation (the "Company"), and to be named as a director in
the Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission by the Company.

Dated:  February 4, 1998                          /s/  James R. Maher
                                                  -------------------
                                                  James R. Maher


<PAGE>

                       CONSENT TO BE NAMED AS A DIRECTOR

         I, Joseph P. Page, hereby consent to be a director of Panavision
Inc., a Delaware corporation (the "Company"), and to be named as a director in
the Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission by the Company.

Dated:  February 4, 1998                          /s/ Joseph P. Page
                                                  ------------------
                                                  Joseph P. Page


<PAGE>

                       CONSENT TO BE NAMED AS A DIRECTOR

         I, Kenneth Ziffren, hereby consent to be a director of Panavision
Inc., a Delaware corporation (the "Company"), and to be named as a director in
the Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission by the Company.

Dated:  February 4, 1998                          /s/  Kenneth Ziffren
                                                  --------------------
                                                  Kenneth Ziffren


<PAGE>
                                    PROXY

                                PANAVISION INC.
                              6219 DE SOTO AVENUE
                        WOODLAND HILLS, CALIFORNIA 91367

       PROXY FOR THE COMBINED ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
                         10:00 A.M. NEW YORK CITY TIME
 
The undersigned appoints William C. Scott and John S. Farrand and each of them,
with full power of substitution, as proxies, to vote all shares of Common Stock
of Panavision Inc. ('Panavision') that the undersigned is entitled in any
capacity to vote at the Meeting of Stockholders of Panavision to be held on
_______, June __, 1998, at 10:00 A.M., local time, at The Chase Manhattan Bank,
270 Park Avenue, 11th Floor, Conference Room C, New York, New York, and at any
and all adjournments or postponements thereof, on the matters set forth on the
reverse side hereof and on such other matters as may properly come before the
meeting. This proxy revokes all prior proxies given by the undersigned.
 
All properly executed proxies will be votes as directed on the reverse side of
this proxy card. If no instructions are indicated on a properly executed proxy,
such proxy will be voted FOR the proposals set forth on the reverse side hereof.
All ABSTAIN votes will be counted in determining the existence of a quorum at
the Meeting, but will have the same effect as a vote against proposals 1 and 3.
 
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE DIRECTORS OF PANAVISION
INC.
 
Receipt of the Notice of Meeting and the Proxy Statement, dated May __, 1998
(the 'Proxy Statement'), is hereby acknowledged.
 
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

                               SEE REVERSE SIDE

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
                             FOLD AND DETACH HERE
 
<PAGE>

    The Board of Directors recommends a vote FOR the following proposals.

Please mark your votes as indicated in this example    /X/

1.   To approve of the Recapitalization Agreement, as described in the
accompanying Proxy Statement.

               For              Against           Abstain

               / /                / /               / /


2.   To elect Ronald O. Perelman, William C. Scott, John S. Farrand, Howard
Gittis, James M. Maher, Joseph P. Page, Martin D. Payson and Kenneth Ziffren as
directors of Panavision until the next annual meeting and until their successors
are duly elected and qualified.

WITHHOLD for the following only: (Write the name of the nominee(s) in the space
below)

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

               For all                       WITHHOLD
               Nominees                      AUTHORITY
                                          to vote for all
                                              nominees

                 / /                             / /

3.   To ratify the appointment of Ernst & Young LLP as independent certified
public accountants of Panavision for the fiscal year ending December 31, 1998.

               For              Against           Abstain

               / /                / /               / /


4.   To transact such other business as may properly come before the Special
Meeting and any adjournments or postponements thereof.

               For              Against           Abstain

               / /                / /               / /


SIGNATURE________________________________________________________________

DATE_____________________________________________________________________

NOTE:  Please sign exactly as name appears hereon. If a joint account, each 
       joint owner must sign. If signing for a corporation or partnership
       or as agent, attorney or fiduciary, indicate the capacity in which 
       you are signing.

                             FOLD AND DETACH HERE


<PAGE>

                                FORM OF ELECTION
                         IN CONNECTION WITH THE MERGER
                                       OF
                             PX MERGER CORPORATION,
                           A CORPORATION ORGANIZED BY
                            PX HOLDING CORPORATION,
                                 WITH AND INTO
                                PANAVISION INC.
 
     This Form of Election is to be completed by stockholders (each such
stockholder, a 'Holder'), of common stock, par value $.01 per share ('Panavision
Common Stock'), of Panavision Inc. ('Panavision'), to make an election to either
(i) retain fully paid and nonassessable shares of Panavision Common Stock
('Non-Cash Election Shares') or (ii) subject to proration as described in the
Proxy Statement (as defined below), receive an amount in cash equal to $27.00
per share (the 'Cash Price') of Panavision Common Stock ('Cash Election
Shares'), in connection with the proposed merger (the 'Merger') of PX Merger
Corporation ('Merger Sub') with and into Panavision. Holders who elect Non-Cash
Election Shares should submit this Form, accompanied by certificates for shares
(the 'Common Stock Certificates') of Panavision Common Stock, to the Exchange
Agent. Holders who elect to receive Cash Election Shares for all of their shares
of Panavision Common Stock should submit only this Form to the Exchange Agent,
unaccompanied by Common Stock Certificates. Each share of Panavision Common
Stock for which no election is made will automatically, subject to proration as
described in the Proxy Statement, be converted into the right to receive the
Cash Price from Panavision following the Merger.
 
     HOLDERS ELECTING TO RECEIVE THE CASH PRICE FOR ALL THEIR SHARES AND WHO
THEREFORE DO NOT WISH TO RETAIN ANY OF THEIR SHARES OR WHO DO NOT MAKE AN
ELECTION SHOULD RETAIN THEIR COMMON STOCK CERTIFICATES UNTIL LETTERS OF
TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER.
 
                     THE EXCHANGE AGENT FOR THE MERGER IS:
                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
 
<TABLE>
<CAPTION>
            BY HAND:                       BY OVERNIGHT COURIER:                           BY MAIL:
<S>                               <C>                                      <C>
    ChaseMellon Shareholder               ChaseMellon Shareholder                   ChaseMellon Shareholder
        Services, L.L.C.                     Services, L.L.C.                          Services, L.L.C.
    120 Broadway, 13th Floor                85 Challenger Road                       Post Office Box 3301
    New York, New York 10271                  Mail Drop-Reorg                 South Hackensack, New Jersey 07606
   Attention: Reorganization         Ridgefield Park, New Jersey 07660       Attention: Reorganization Department
           Department              Attention: Reorganization Department
</TABLE>
 
                            TOLL FREE NUMBER: None

                           ------------------------
 
                        FOR GUARANTEE OF DELIVERY ONLY:

                        FACSIMILE NUMBER: (201) 329-8936
                       CONFIRM FACSIMILE: (201) 296-4860

                               INFORMATION AGENT:
 
                             D.F. King & Co., Inc.
                                77 Water Street
                            New York, New York 10005
                 Banks and Brokers Call Collect: (212) 269-5550
                   All Others Call Toll-Free: (800) 758-5378
 
     DELIVERY OF THIS FORM TO AN ADDRESS OR FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS FORM WHERE
INDICATED BELOW. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS FORM IS COMPLETED.


<PAGE>
          THE DEADLINE FOR SUBMITTING THIS FORM TO THE EXCHANGE AGENT,
      TOGETHER, IN THE CASE OF HOLDERS WHO ELECT NON-CASH ELECTION SHARES,
     WITH YOUR COMMON STOCK CERTIFICATES (OR AFFIDAVITS AND INDEMNIFICATION
          FOR LOST COMMON STOCK CERTIFICATES OR GUARANTEES OF DELIVERY
        OF COMMON STOCK CERTIFICATES), IS 5:00 P.M., NEW YORK CITY TIME,
                      ON JUNE [  ], 1998, UNLESS EXTENDED.
 
     Holders of Panavision Common Stock whose Common Stock Certificates are not
immediately available or who cannot deliver their Common Stock Certificates and
all other documents required hereby to the Exchange Agent prior to 5:00 p.m.,
New York City time, on June [  ], 1998, unless extended (the 'Election Date'),
and who wish to make an election to receive Non-Cash Election Shares must do so
pursuant to the affidavit and indemnification procedure for lost Common Stock
Certificates described in Instruction D5 or the guaranteed delivery procedure
described in Instruction A1.
 
     HOLDERS MAY ELECT TO RETAIN FULLY PAID AND NONASSESSABLE SHARES OF
PANAVISION COMMON STOCK OR , SUBJECT TO PRORATION AS DESCRIBED IN THE PROXY
STATEMENT, TO RECEIVE THE CASH PRICE, WITH RESPECT TO ALL OR ANY PORTION OF THE
SHARES OF PANAVISION COMMON STOCK HELD BY SUCH HOLDERS. SHARES FOR WHICH SUCH AN
ELECTION IS NOT MADE SHALL AUTOMATICALLY, SUBJECT TO PRORATION AS DESCRIBED IN
THE PROXY STATEMENT, BE EXCHANGED FOR THE RIGHT TO RECEIVE THE CASH PRICE.
 
     List below the Common Stock Certificates to which this Form relates. If the
space provided below is inadequate, the information shown in the space below
with respect to the Common Stock Certificates and the type of election should be
listed on a separate signed schedule affixed hereto.
 
Box I

<TABLE>
<CAPTION>
                                           TYPE OF ELECTION (SEE INSTRUCTION D)
                  SHARES OF PANAVISION COMMON STOCK SUBMITTED (ATTACH SEPARATE SIGNED LIST IF NECESSARY)
                                                                                            NUMBER OF         NUMBER OF
                                                                                              SHARES         SHARES WITH
                                                                            TOTAL          WITH RESPECT       RESPECT TO
                                                                            NUMBER         TO WHICH AN         WHICH AN
                                                                          OF SHARES        ELECTION TO       ELECTION TO
                                                       COMMON STOCK     REPRESENTED BY        RETAIN         RECEIVE THE
                                                       CERTIFICATE       COMMON STOCK       SHARES IS         CASH PRICE
  NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)       NUMBER(1)        CERTIFICATE           MADE           IS MADE(2)
<S>                                                  <C>               <C>               <C>               <C>
 
                                                     ----------------------------------------------------------------------
 
                                                     ----------------------------------------------------------------------
 
                                                     ----------------------------------------------------------------------
 
                                                     ----------------------------------------------------------------------
 
                                                     ----------------------------------------------------------------------

 
                                                     ----------------------------------------------------------------------
                                                          TOTAL
                                                        SHARES OF
                                                        PANAVISION
                                                       COMMON STOCK

</TABLE>

 (1) Stockholders who hold Panavision Common Stock in book-entry form should
     list their account number.
 
 (2) Holders who wish to receive the Cash Price for all of their shares of 
     Panavision Common Stock and who therefore do not wish to make an election
     to receive Non-Cash Election Shares for any of their shares of Panavision
     Common Stock should not send any Common Stock Certificates. Such Holders
     should retain their Common Stock Certificates until Letters of Transmittal
     are received after the Effective Time of the Merger.
 
     IF YOUR CERTIFICATE(S) HAS BEEN LOST, STOLEN OR DESTROYED, CONTACT THE
EXCHANGE AGENT IMMEDIATELY AT 1-800-777-3674 (SEE INSTRUCTION D5).

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

<PAGE>

Ladies and Gentlemen:
 
     In connection with the proposed merger (the 'Merger') of Merger Sub with
and into Panavision, the undersigned hereby makes an election to either (i)
retain fully paid and nonassessable shares of Panavision Common Stock ('Non-Cash
Election Shares') or (ii) to receive an amount in cash equal to $27.00 per share
(the 'Cash Price') of Panavision Common Stock ('Cash Election Shares'), subject
to proration as described in the Agreement of Recapitalization and Merger, dated
as of December 18, 1997, by and among Panavision, PX Holding Corporation ('PX
Holding') and Merger Sub (the 'Recapitalization Agreement') and in the Proxy
Statement (as defined below). Holders who elect Non-Cash Election Shares should
submit this Form, accompanied by certificates for shares (the 'Common Stock
Certificates') of Panavision Common Stock, to the Exchange Agent. Holders who
elect to receive Cash Election Shares for all of their shares of Panavision
Common Stock should submit only this Form to the Exchange Agent, unaccompanied
by Common Stock Certificates. Each share of Panavision Common Stock for which no
election is made will automatically, subject to proration, be converted into the
right to receive the Cash Price from Panavision following the Merger. It is
understood that the following election is subject to (a) the terms, conditions
and limitations set forth in the Proxy Statement (the 'Proxy Statement'), dated
May [  ], 1998, relating to the Merger receipt of which is hereby acknowledged
by the undersigned, (b) the terms, conditions and limitations set forth in the
Recapitalization Agreement and (c) the instructions herein. The acceptance by
the Exchange Agent on behalf of Panavision of the Common Stock Certificates for
Non-Cash Election Shares delivered pursuant to this Form will constitute a
binding agreement between the undersigned and Panavision upon the terms and
subject to the conditions of (a), (b) and (c) listed above.
 
     HOLDERS ELECTING TO RECEIVE THE CASH PRICE FOR ALL THEIR SHARES AND WHO
THEREFORE DO NOT WISH TO RETAIN ANY OF THEIR SHARES OR WHO DO NOT MAKE AN
ELECTION SHOULD RETAIN THEIR COMMON STOCK CERTIFICATES UNTIL LETTERS OF
TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER.
 
     AT LEAST 745,380 OF THE SHARES OF PANAVISION COMMON STOCK HELD BY HOLDERS,
REPRESENTING 12% OF SUCH HOLDERS' SHARES, MUST BE RETAINED BY THE HOLDERS EITHER
THROUGH ELECTION OR PRORATION. ACCORDINGLY, THE RIGHT TO RECEIVE THE CASH PRICE
FOR EACH CASH ELECTION SHARE IS SUBJECT TO PRORATION AS SET FORTH IN THE
RECAPITALIZATION AGREEMENT AND DESCRIBED IN THE PROXY STATEMENT. THERE CAN BE NO
ASSURANCE THAT A HOLDER WHO ELECTS CASH ELECTION SHARES WILL RECEIVE CASH FOR
ALL OF SUCH HOLDER'S CASH ELECTION SHARES.
 
     A HOLDER OF SHARES OF PANAVISION COMMON STOCK HAVING A PREFERENCE FOR
RETAINING SHARES OF PANAVISION COMMON STOCK SHOULD MAKE AN ELECTION TO RECEIVE
NON-CASH ELECTION SHARES BECAUSE SHARES AS TO WHICH NO ELECTION HAS BEEN MADE
WILL BE CONVERTED INTO THE RIGHT TO RECEIVE THE CASH PRICE IN THE MERGER. NONE
OF PX HOLDING, PANAVISION, THE PX HOLDING BOARD OF DIRECTORS OR THE PANAVISION
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER STOCKHOLDERS SHOULD
ELECT TO RECEIVE CASH OR TO RETAIN SHARES OF PANAVISION COMMON STOCK IN THE
MERGER. EACH HOLDER MUST MAKE HIS OR HER OWN DECISION WITH RESPECT TO SUCH
ELECTION.
 
     In the case of Non-Cash Election Shares (a) the undersigned authorizes and

instructs you, as Exchange Agent, to receive the Common Stock Certificates
listed above and to deliver on behalf of the undersigned, in exchange for the
shares of Panavision Common Stock represented thereby, any certificates for the
shares of Panavision Common Stock issuable in the Merger and (b) if Common Stock
Certificates are not delivered herewith, there is furnished an affidavit and
indemnification for any mutilated, lost, destroyed or stolen Common Stock
Certificate or a guarantee of delivery of such Common Stock Certificate from an
Eligible Institution (as defined herein).
 
     In the case of an Election to receive Non-Cash Election Shares, the
undersigned represents and warrants that the undersigned has full power and
authority to surrender the Common Stock Certificate(s) surrendered herewith or
covered by an affidavit and indemnification for mutilated, lost, destroyed or
stolen Common Stock Certificate or a guarantee of delivery, free and clear of
any liens, claims, charges or encumbrances whatsoever. The undersigned
understands and acknowledges that the method of delivery of the Common Stock
Certificate(s) and all other required documents is at the option and risk of the
undersigned and that the risk of loss and title to such

<PAGE>

Common Stock Certificate(s) shall pass only after the Exchange Agent has
actually received the Common Stock Certificate(s). All questions as to the
election revocation, change and form of any Election and surrender of Common
Stock Certificates hereunder shall be determined by the Exchange Agent in its
reasonable discretion, and such determination shall be binding and conclusive.
The undersigned, upon request, shall execute and deliver all additional
documents deemed by the Exchange Agent or Panavision to be necessary or
desirable to complete the sale, assignment, transfer, cancellation and
retirement of the shares of Panavision Common Stock delivered herewith. No
authority hereby conferred or agreed to be conferred hereby shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
 
     Unless otherwise indicated in the box entitled 'Special Registration
Instructions,' please register any Common Stock Certificate for shares of
Panavision Common Stock in the name of the registered holder(s) of the shares of
Panavision Common Stock appearing above under 'Type of Election.' Similarly,
unless otherwise indicated in the box entitled 'Special Delivery Instructions,'
please mail certificates for shares of Panavision Common Stock to the registered
holder(s) of such shares at the address(es) of the registered holder(s)
appearing above under 'Type of Election.' In the event that the boxes entitled
'Special Registration Instructions' and 'Special Delivery Instructions' are both
completed, please issue any certificate for shares of Panavision Common Stock in
the name(s) of, and mail such certificate to, the person(s) so indicated.

<PAGE>

Box II                                                     Box III
 
<TABLE>
<CAPTION>
         SPECIAL REGISTRATION INSTRUCTIONS                         SPECIAL DELIVERY INSTRUCTIONS
            (SEE INSTRUCTIONS D6 AND D7)                                (SEE INSTRUCTIONS D8)
<S>                                                        <C>                                                                     
     To be completed ONLY if the certificates for          To be completed ONLY if the certificates for Non-Cash
Non-Cash Election Shares are to be registered in the name  Election Shares are to be mailed to someone other than
of someone other than the undersigned.                     the undersigned or to the undersigned at an address other
                                                           than that shown under 'Type of Election.'

                                                           MAIL CERTIFICATES TO:

Name:___________________________________________________   Name:______________________________________________________          
                      (PLEASE PRINT)                                            (PLEASE PRINT)

Address:________________________________________________                         


________________________________________________________   Address:___________________________________________________
                                              (ZIP CODE)            

_________________________________________________________  ___________________________________________________________
                                                                                                            (ZIP CODE)
</TABLE>
 
Box IV
 
<TABLE>
                                                     SIGN HERE

<S>                                                        <C> 
______________________________________________________     Name(s):_____________________________________________________
                      (PLEASE PRINT)                                              (SIGNATURE(S) OF OWNER(S))
 
______________________________________________________     Capacity (full title):_______________________________________
Must be signed by registered owner(s) exactly as name(s)   
appear(s) on stock certificate(s) or by person(s)         Address:______________________________________________________
authorized to become registered holder(s) by certificates 
and documents transmitted herewith. If signature is by     _____________________________________________________________
attorney, executor, administrator, trustee or guardian or                                                     (ZIP CODE)
others acting in a fiduciary capacity, set forth full      _____________________________________________________________
title and see Instruction D3.                                             (AREA CODE AND TELEPHONE NUMBER)

                                                           _____________________________________________________________
                                                                          (TAXPAYER IDENTIFICATION OR
                                                                             SOCIAL SECURITY NUMBER)

                                                           Dated:_______________________________________________________
</TABLE>
 
Box V
 
<TABLE>
<CAPTION>
                                             GUARANTEE OF SIGNATURE(S)
                            (SEE INSTRUCTIONS D1 AND D7 CONCERNING SIGNATURE GUARANTEE)
 
<S>                                                        <C>
If you have filled out the Special Registration            Authorized
Instructions above, you must have your signatures          Signature:____________________________________________________
guaranteed. (See Instruction D8.)
                                                           Name:_________________________________________________________
                                                                                     (PLEASE PRINT)
Dated:__________________________________________________   Firm:_________________________________________________________
 
                                                           Address:______________________________________________________

                                                           ______________________________________________________________ 
                                                                                                               (ZIP CODE)
                                                           ______________________________________________________________  
                                                                          (AREA CODE AND TELEPHONE NUMBER)
</TABLE>

<PAGE>
                                  INSTRUCTIONS
 
A. SPECIAL CONDITIONS
 
     1. Time in Which to Elect.  To be effective, an election pursuant to the
terms and conditions set forth herein (an 'Election') on this Form or a
facsimile hereof must be received by the Exchange Agent, at the address set
forth above, no later than 5:00 P.M., New York City time, on June [  ], 1998
(the 'Election Date'). Holders electing to receive Non-Cash Election Shares must
submit this Form of Election accompanied by all of such Holder's certificates
representing shares of Panavision Common Stock or a proper guarantee of delivery
thereof. Holders electing to receive Non-Cash Election Shares whose stock
certificates are not immediately available may also make an effective Election
by completing this form or facsimile hereof, having the Guarantee of Delivery
box (BOX V) properly completed and duly executed (subject to the condition that
the certificates for which delivery is thereby guaranteed are in fact delivered
to the Exchange Agent, duly endorsed in blank or otherwise in form acceptable
for transfer on the books of Panavision, no later than 5:00 P.M., New York City
time, on the third New York Stock Exchange trading day after the dateof
execution of such guarantee of delivery). Holders electing to receive Cash
Election Shares for all of their shares of Panavision Common Stock should submit
only this Form, unaccompanied by Common Stock Certificates. Subject to proration
as described in the Proxy Statement, each share of Panavision Common Stock with
respect to which the Exchange Agent shall have not received an effective
Election prior to the Election Date, or with respect to which the Exchange Agent
has received an effective Election For Cash Election Shares, outstanding at the
effective time of the Merger will be converted subject to proration, into the
right to receive the Cash Price from Panavision following the Merger. See
Instruction B. HOLDERS ELECTING TO RECEIVE THE CASH PRICE OR WHO DO NOT MAKE AN
ELECTION SHOULD RETAIN THEIR COMMON STOCK CERTIFICATES UNTIL LETTERS OF
TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER.
 
     2. Revocation of Election.  Any Election may be revoked by the person who
submitted this Form to the Exchange Agent and, in the case of Non-Cash Election
Shares, the certificate(s) for shares withdrawn, by written notice duly executed
and received by the Exchange Agent (i) prior to 5:00 P.M. on the Election Date
or (ii) after the Election Date, if (and to the extent that) the Exchange Agent
is legally required to permit revocations and the effective time shall not have
occurred prior to such date. Such notice must specify the person in whose name
the shares of Panavision Common Stock to be withdrawn had been deposited, the
number of shares to be withdrawn, the name of the registered holder thereof, and
the serial numbers shown on the certificate(s) representing the shares to be
withdrawn. If an Election is revoked, and the certificates(s) for shares
withdrawn, the Panavision Common Stock certificate(s) submitted therewith will
be promptly returned by the Exchange Agent to the person who submitted such
certificate(s).
 
     3. Termination of Right to Elect.  If for any reason the Merger is not
consummated or is abandoned, all Elections will be void and of no effect.
Certificate(s) for Panavision Common Stock previously received by the Exchange
Agent will be returned promptly by the Exchange Agent to the person who
submitted such stock certificate(s).
 

B. ELECTION AND PRORATION PROCEDURES
 
     A description of the election and proration procedures is set forth in the
Proxy Statement under 'THE MERGER--Election Procedure' and
'--Conversion/Retention of Shares; Procedures for Exchange of Certificates.' A
full statement of the election and proration procedures is contained in the
Recapitalization Agreement and all Elections are subject to compliance with such
procedures. IN CONNECTION WITH MAKING ANY ELECTION, HOLDERS SHOULD READ
CAREFULLY, AMONG OTHER MATTERS, THE AFORESAID DESCRIPTION AND STATEMENT AND THE
INFORMATION CONTAINED IN THE PROXY STATEMENT UNDER 'THE MERGER--CERTAIN FEDERAL
INCOME TAX CONSEQUENCES.'
 
     AS A RESULT OF THE PRORATION PROCEDURES, HOLDERS ELECTING TO RECEIVE THE
CASH PRICE FOR THEIR SHARES OF PANAVISION COMMON STOCK MAY BE REQUIRED TO RETAIN
A PORTION OF SUCH SHARES. SUCH HOLDERS WILL NOT BE ABLE TO CHANGE THE NUMBER OF
NON-CASH ELECTION SHARES OR CASH ELECTION SHARES ALLOCATED TO THEM PURSUANT TO
SUCH PROCEDURES.
 
     HOLDERS ELECTING TO RECEIVE THE CASH PRICE FOR ALL THEIR SHARES AND WHO
THEREFORE DO NOT WISH TO RETAIN ANY OF THEIR SHARES OR WHO DO NOT MAKE AN

<PAGE>

ELECTION SHOULD RETAIN THEIR COMMON STOCK CERTIFICATES UNTIL LETTERS OF
TRANSMITTAL ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER.
 
C. RECEIPT OF NON-CASH ELECTION SHARES OR LETTERS OF TRANSMITTAL
 
     As soon as practicable after the effective time of the Merger and after the
Election Date, the Exchange Agent will mail certificate(s), in the case of
Non-Cash Election Shares, with respect to each share of Panavision Common Stock
which is included in any effective Non-Cash Election. Subject to proration as
described in the Proxy Statement, Holders who elected to receive Cash Election
Shares, who declined to make an Election, or who failed to make an effective
Election with respect to any or all of their shares will receive, for each such
share, the right to receive the Cash Price as soon as practicable following the
receipt of a properly completed Letter of Transmittal by the Exchange Agent.
 
D. GENERAL
 
     1. Execution and Delivery.  This Form or a facsimile hereof must be
properly filled in, dated and signed in BOX IV, and must be delivered (together,
only in the case of Holders electing to receive Non-Cash Election Shares, with
all Common Stock Certificates for such shares of Panavision Common Stock held by
such Holder, duly endorsed in blank or otherwise in form acceptable for transfer
on the books of Panavision or with a duly signed guarantee of delivery of such
Common Stock Certificates) to the Exchange Agent at any of the addresses set
forth above.
 
     HOLDERS ELECTING TO RECEIVE THE CASH PRICE FOR ALL THEIR SHARES OF
PANAVISION COMMON STOCK OR WHO DO NOT MAKE AN ELECTION SHOULD RETAIN THEIR
COMMON STOCK CERTIFICATES UNTIL LETTERS OF TRANSMITTAL ARE RECEIVED AFTER THE
EFFECTIVE TIME OF THE MERGER.
 

     THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF THE
HOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS SUGGESTED.
 
     2. Inadequate Space.  If there is insufficient space on this Form to list
all your Common Stock Certificates, please attach a separate signed schedule
containing the information shown in Box I.
 
     3. Signatures.  The signature (or signatures, in the case of Common Stock
Certificates owned by two or more joint holders) on this Form should correspond
exactly with the name(s) as written on the face of the Common Stock Certificates
representing such shares unless the shares of Panavision Common Stock described
on this Form have been assigned by the registered holder(s), in which event this
Form should be signed in exactly the same form as the name of the last
transferee indicted on the transfers attached to or endorsed on the such Common
Stock Certificates.
 
     If this Form is signed by a person or persons other than the registered
owners of the Common Stock Certificates listed, the Common Stock Certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered owner(s) appear on such Common
Stock Certificates.
 
     If this Form or any Common Stock Certificate(s) or stock power(s) are
signed by a trustee, executor, administrator, guardian, officer of a
corporation, attorney-in-fact or any other person acting in a representative or
fiduciary capacity, the person signing must give such person's full title in
such capacity and appropriate evidence of authority to act in such capacity must
be forwarded with this Form.
 
     4. Partial Exchanges.  If fewer than all the shares represented by any
certificate delivered to the Exchange Agent are to be retained, fill in the
number of Non-Cash Election Shares in the box entitled 'Number of Shares of
Panavision Common Stock to be Retained' and the number of Cash Election Shares
in the box entitled 'Number of Shares with Respect to which an Election to
Receive the Cash Price is Made'.
 
     5. Lost or Destroyed Certificates.  If your Common Stock Certificates have
been either lost or destroyed, please make note of this fact on the front of
this Form opposite your name and address and the appropriate forms for
replacement will be sent to you. You will then be instructed as to the steps you
must take in order to receive a stock certificate(s) representing Non-Cash
Election Shares.

<PAGE>

     6. New Certificates in Same Name.  If any Common Stock Certificate(s)
representing Non-Cash Election Shares are to be registered in exactly the same
name(s) that appears on the Common Stock Certificate(s) representing shares of
Panavision Common Stock submitted with this Form, no endorsement of Common Stock
Certificate(s) or separate stock power(s) is required.
 
     7. New Certificates in Different Name.  If the section entitled 'Special
Registration Instructions' in BOX II is completed, then signatures on this Form

of Election must be guaranteed by a firm that is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents' Medallion Program (each an 'Eligible
Institution'). If the surrendered certificates are registered in the name of a
person other than the signer of this Form of Election, or if the issuance is to
be made to a person other than the signer of this Form of Election, or if the
issuance is to be made to a person other than the registered owner(s), then the
surrendered Common Stock Certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name(s) of the
registered owners appear on such certificate(s) or stock power(s), with the
signatures on the Common Stock Certificate(s) or stock power(s) guaranteed by an
Eligible Institution as provided herein.
 
     8. Special Delivery Instructions.  If the Common Stock Certificates for
Non-Cash Election Shares are to be registered in the name of the registered
holder(s) of shares of Panavision Common Stock, but are to be sent to someone
other than the registered holder(s) or to an address other than the address of
the registered holder, it will be necessary to indicate such person or address
in BOX III.
 
     9. Miscellaneous.  A single Common Stock Certificate representing Non-Cash
Election Shares will be issued.
 
     All questions with respect to this Form and the Elections (including,
without limitation, questions relating to the timeliness or effectiveness of
revocation or any Election and computations as to proration) will be determined
by Panavision and PX Holding, which determination shall be conclusive and
binding.
 
     Additional copies of this Form may be obtained from D.F. King & Co., Inc.
as Information Agent (whose telephone number is (212) 269-5550 (Call Collect) or
1-800-758-5378 (Toll Free)).



<PAGE>

                             LETTER OF TRANSMITTAL
                       TO ACCOMPANY CERTIFICATES FORMERLY
         REPRESENTING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
                                       OF
                                PANAVISION INC.
                   SURRENDERED IN CONNECTION WITH THE MERGER
                                       OF
                             PX MERGER CORPORATION,
                           A CORPORATION ORGANIZED BY
                            PX HOLDING CORPORATION,
                                 WITH AND INTO
                                PANAVISION INC.
 
     This Letter of Transmittal is to accompany certificates for shares of
common stock, par value $.01 per share ('Panavision Common Stock'), of
Panavision Inc. ('Panavision') if such certificates have not been submitted
pursuant to an effective election to retain shares of Panavision Common Stock
('Non-Cash Election Shares') in connection with the merger (the 'Merger') of PX
Merger Corporation ('Merger Sub') with and into Panavision, which became
effective on June [  ], 1998.
 
     HOLDERS OF PANAVISION COMMON STOCK WHO HAVE PREVIOUSLY MADE AN EFFECTIVE
ELECTION TO RETAIN NON-CASH ELECTION SHARES NEED NOT SUBMIT THIS LETTER OF
TRANSMITTAL WITH RESPECT TO THE SHARES COVERED BY SUCH ELECTION.
 
     By delivering certificates for shares of Panavision Common Stock (the
'Common Stock Certificates'), the registered holder of such certificates
releases Panavision, Merger Sub and their respective affiliates, directors,
officers, employees, partners, agents, advisors and representatives, and their
respective successors and assigns, from any and all claims arising from or in
connection with the purchase or ownership of such Panavision Common Stock or the
exchange of such Panavision Common Stock pursuant to the Recapitalization
Agreement (as defined herein).
 
          TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., EXCHANGE AGENT
 
<TABLE>
<CAPTION>
<S>                                       <C>                                       <C>
                BY HAND:                           BY OVERNIGHT COURIER:                            BY MAIL:

                                                  ChaseMellon Shareholder
        ChaseMellon Shareholder                       Services, L.L.C.                      ChaseMellon Shareholder
            Services, L.L.C.                         85 Challenger Road                         Services, L.L.C.
        120 Broadway, 13th Floor                      Mail Drop-Reorg                         Post Office Box 3301
        New York, New York 10271             Ridgefield Park, New Jersey 07660         South Hackensack, New Jersey 07606
  Attention: Reorganization Department      Attention: Reorganization Department      Attention: Reorganization Department
</TABLE>
 
                             TOLL FREE NUMBER: None

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


                        FOR GUARANTEE OF DELIVERY ONLY:
                        FACSIMILE NUMBER: (201) 329-8936
                       CONFIRM FACSIMILE: (201) 296-4860
                               INFORMATION AGENT:
 
                             D.F. King & Co., Inc.
                                77 Water Street
                            New York, New York 10005
                 Banks and Brokers Call Collect: (212) 269-5550
                   All Others Call Toll-Free: (800) 758-5378
 
     DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR FACSIMILE OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
FORM WHERE INDICATED BELOW. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ
CAREFULLY BEFORE THIS FORM IS COMPLETED.

<PAGE>

     List below the Common Stock Certificates to which this Letter of
Transmittal relates. If the space provided below is inadequate, the information
shown in the space below with respect to the Common Stock Certificates should be
listed on a separate signed schedule affixed hereto.
 
Box I

                      DESCRIPTION OF SHARES SURRENDERED
                 SHARES OF PANAVISION COMMON STOCK SUBMITTED
                  (ATTACH SEPARATE SIGNED LIST IF NECESSARY)
 
<TABLE>
<CAPTION>
                                                                                                  TOTAL NUMBER OF
                                                                                                      SHARES
                                                                                  COMMON STOCK    REPRESENTED BY
                                                                                   CERTIFICATE     COMMON STOCK
               NAME(S) AND ADDRESS(ES)* OF REGISTERED HOLDER(S)                     NUMBER(1)       CERTIFICATE
- -----------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>             <C>

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

                                                                                      TOTAL
                                                                                    SHARES OF
                                                                                   PANAVISION
                                                                                  COMMON STOCK

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

</TABLE>

* Only certificates registered in a single form may be submitted with this 
  Letter of Transmittal. If certificates are registered in different forms 
  (e.g., John R. Doe and J.R. Doe), it will be necessary to fill in, sign and
  submit as many separate Letters of Transmittal as there are different 
  registrations of certificates.

(1) Stockholders who hold Panavision Common Stock in book-entry form should list
    their account number.
 
     IF YOUR CERTIFICATE(S) HAS BEEN LOST, STOLEN OR DESTROYED, CONTACT THE
EXCHANGE AGENT IMMEDIATELY AT 1-800-777-3674 (SEE INSTRUCTION C4).
 
                         ------------------------------

<PAGE>

Ladies and Gentlemen:
 
     Pursuant to the Agreement of Recapitalization and Merger, dated as of
December 18, 1997, (the 'Recapitalization Agreement') by and among Panavision,
PX Holding Corporation ('PX Holding') and Merger Sub, providing for the Merger,
the undersigned surrenders the enclosed certificate(s) which immediately prior
to the Merger represented shares of Panavision Common Stock, in exchange for an
amount in cash equal to $27.00 for each share of Panavision Common Stock (the
'Cash Price'), subject to the proration procedures as described in the Proxy
Statement (as defined below).
 
     It is understood that for a holder of a certificate to receive the Cash
Price or, in the case of proration, certificates for Non-Cash Election Shares,
the Exchange Agent must receive (i) this Letter of Transmittal properly
completed, (ii) certificates representing such holder's shares of Panavision
Common Stock and (iii) any other documents required by this Letter of
Transmittal. It is further understood that this Letter of Transmittal is subject
to (a) the terms, conditions and limitations set forth in the Proxy Statement,
dated May [  ], 1998, relating to the Merger (the 'Proxy Statement'), receipt of
which is hereby acknowledged by the undersigned, (b) the terms, conditions and
limitations set forth in the Recapitalization Agreement and (c) the instructions
herein. The acceptance by the Exchange Agent on behalf of Panavision of the Cash
Price or, in the case of proration certificates for Non-Cash Election Shares,
delivered pursuant to this Letter of Transmittal will constitute a binding
agreement between the undersigned and Panavision upon the terms and subject to
the conditions of (a), (b) and (c) listed above.
 
     The undersigned represents and warrants that the undersigned has full power
and authority to surrender the Common Stock Certificate(s) surrendered herewith
or covered by an affidavit and indemnification for mutilated, lost, destroyed or
stolen Common Stock Certificate(s) or a guarantee of delivery, free and clear of
any liens, claims, charges or encumbrances whatsoever. The undersigned
understands and acknowledges that the method of delivery of the Common Stock
Certificate(s) and all other required documents is at the option and risk of the
undersigned and that the risk of loss and title to such Common Stock
Certificate(s) shall pass only after the Exchange Agent has actually received
the Common Stock Certificate(s). All questions as to the surrender of Common
Stock Certificate(s) hereunder shall be determined by the Exchange Agent in its
reasonable discretion, and such determination shall be binding and conclusive.
The undersigned, upon request, shall execute and deliver all additional
documents deemed by the Exchange Agent or Panavision to be necessary or
desirable to complete the sale, assignment, transfer, cancellation and
retirement of the shares of Panavision Common Stock delivered herewith. No
authority hereby conferred or agreed to be conferred hereby shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
 
     The undersigned authorizes and instructs you, as Exchange Agent, to deliver
such certificates of Panavision Common Stock to the Company and to receive on
behalf of the undersigned, for the shares of Panavision Common Stock represented
thereby, any check for cash or, in the event of proration, certificate for

Non-Cash Election Shares issuable in the Merger in accordance with the
Recapitalization Agreement.
 
     Unless otherwise indicated in the box entitled 'Special Payment
Instructions,' please issue any check or, in the event of proration, register
any Common Stock Certificate for shares of Panavision Common Stock in the name
of the registered holder(s) of the shares of Panavision Common Stock appearing
above in the box entitled 'Description of Shares Surrendered.' Similarly, unless
otherwise indicated in the box entitled 'Special Delivery Instructions,' please
issue any check or, in the event of proration, mail certificates for shares of
Panavision Common Stock to the registered holder(s) of such shares at the
address(es) of the registered holder(s) appearing above in the box entitled
'Description of Shares Surrendered.' In the event that the boxes entitled
'Special Payment Instructions' and 'Special Delivery Instructions' are both
completed, please issue any check or, in the event of proration, issue any
Certificates for shares of Panavision Common Stock in the name(s) of, and mail
such certificate to, the person(s) so indicated.

<PAGE>

BOX II                                                     BOX III

<TABLE>
<CAPTION>
      SPECIAL PAYMENT INSTRUCTIONS                         SPECIAL DELIVERY INSTRUCTIONS
            (SEE INSTRUCTIONS C5 AND C6)                   (SEE INSTRUCTION C7)
<S>                                                        <C>
 
     To be completed ONLY if the check is to be made       To be completed ONLY if the check or, in the case of
payable to, or, in the case of proration, the              proration, the certificates for Non-Cash Election Shares,
certificates for Non-Cash Election Shares are to be        are to be mailed to someone other than the undersigned or
registered in, the name of someone other than the          to the undersigned at an address other than that shown
undersigned.                                               under 'Description of Shares Surrendered.'
 
                                                           MAIL CERTIFICATES TO:
 
Name:                                                      Name:
     -----------------------------------------------            -------------------------------------------------
                      (PLEASE PRINT)                                             (PLEASE PRINT)
 
Address:                                                   Address:
        ---------------------------------------------               ---------------------------------------------
                                           (ZIP CODE)                                                  (ZIP CODE)

- -----------------------------------------------------
</TABLE>

BOX IV
 
<TABLE>
<S>                                                        <C>
                     SIGN HERE
 
                                                           Name(s):

- -----------------------------------------------------               --------------------------------------------
                      (PLEASE PRINT                                          (SIGNATURE(S) OF OWNER(S))
 
                                                           Capacity (full title):
                                                                                 ------------------------------ 
Must be signed by registered owner(s) exactly as name(s)   Address:
appear(s) on stock certificate(s) or by person(s)                  --------------------------------------------
authorized to become registered holder(s) by certificates  
and documents transmitted herewith. If signature is by     ----------------------------------------------------
attorney, executor, administrator, trustee or guardian or                                            (ZIP CODE)
others acting in a fiduciary capacity, set forth full      ----------------------------------------------------
title and see Instruction C3.                                        (AREA CODE AND TELEPHONE NUMBER)
  
                                                           ----------------------------------------------------
                                                                        (TAXPAYER IDENTIFICATION OR
                                                                          SOCIAL SECURITY NUMBER)
                                                           Dated:
                                                                 ----------------------------------------------
</TABLE>

BOX V
 
<TABLE>
<CAPTION>
                                             GUARANTEE OF SIGNATURE(S)
                            (SEE INSTRUCTIONS C1 AND C6 CONCERNING SIGNATURE GUARANTEE)

<S>                                                        <C>
If you have filled out the Special Payment Instructions    Authorized
above, you must have your signatures guaranteed. (See      Signature: 
Instruction C6.)                                                     -----------------------------------------  
                                                           Name:
                                                                ----------------------------------------------     
                                                                                 (PLEASE PRINT)
                                                           Firm:
                                                                ----------------------------------------------
Dated:                                                     Address:
      -------------------------------------------------            -------------------------------------------

                                                           ---------------------------------------------------
                                                                                                    (ZIP CODE)
                                                           ---------------------------------------------------
                                                                      (AREA CODE AND TELEPHONE NUMBER)
</TABLE>


<PAGE>

                                  INSTRUCTIONS
 
A. ELECTION AND PRORATION PROCEDURES.
 
     A description of the election and proration procedures is set forth in the
Proxy Statement under 'THE MERGER-- Election Procedure' and 
'--Conversion/Retention of Shares; Procedures for Exchange of Certificates.' A
full statement of the election and proration procedures is contained in the
Recapitalization Agreement and all Elections are subject to compliance with such
procedures. IN CONNECTION WITH MAKING ANY ELECTION, HOLDERS SHOULD READ
CAREFULLY, AMONG OTHER MATTERS, THE AFORESAID DESCRIPTION AND STATEMENT AND THE
INFORMATION CONTAINED IN THE PROXY STATEMENT UNDER 'THE MERGER--CERTAIN FEDERAL
INCOME TAX CONSEQUENCES.'
 
     AS A RESULT OF THE PRORATION PROCEDURES, HOLDERS WHO ELECT TO RECEIVE THE
CASH PRICE FOR THEIR SHARES OF PANAVISION COMMON STOCK MAY BE REQUIRED TO RETAIN
A PORTION OF SUCH SHARES. SUCH HOLDERS WILL NOT BE ABLE TO CHANGE THE NUMBER OF
NON-CASH ELECTION SHARES OR CASH ELECTION SHARES ALLOCATED TO THEM PURSUANT TO
SUCH PROCEDURES.
 
B. RECEIPT OF CHECK OR CERTIFICATES IN EXCHANGE FOR PANAVISION COMMON STOCK.
 
     The Exchange Agent will, as soon as practicable, mail a check from
Panavision for an amount equal to $27.00 in cash with respect to each share of
Panavision Common Stock which is submitted with any Letter of Transmittal,
subject to the proration procedures as described in the Proxy Statement.
 
     AS A RESULT OF PRORATION, HOLDERS OF PANAVISION COMMON STOCK MAY RECEIVE
CERTIFICATES FOR NON-CASH ELECTION SHARES INSTEAD OF CASH.
 
C. GENERAL.
 
     1.  Execution and Delivery.  This Letter of Transmittal or a facsimile
hereof must be properly filled in, dated and signed in BOX IV, and must be
delivered, together with all Common Stock Certificates for such shares of
Panavision Common Stock held by such Holder, duly endorsed in blank or otherwise
in form acceptable for transfer on the books of Panavision or with a duly signed
guarantee of delivery of such Common Stock Certificates to the Exchange Agent at
any of the addresses set forth above.
 
     THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF THE
HOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS SUGGESTED.
 
     2.  Inadequate Space.  If there is insufficient space on this Letter of
Transmittal to list all your Common Stock Certificates, please attach a separate
signed schedule containing the information shown in BOX I.
 
     3.  Signatures.  The signature (or signatures, in the case of Common Stock
Certificates owned by two or more joint holders) on this Letter of Transmittal
should correspond exactly with the name(s) as written on the face of the Common
Stock Certificates submitted unless the shares of Panavision Common Stock

described on this Letter of Transmittal have been assigned by the registered
holder(s), in which event this Letter of Transmittal should be signed in exactly
the same form as the name of the last transferee indicted on the transfers
attached to or endorsed on the Common Stock Certificates.
 
     If this Letter of Transmittal is signed by a person or persons other than
the registered owners of the Common Stock Certificates listed, the Common Stock
Certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered owner(s) appear on
such Common Stock Certificates.
 
     If this Letter of Transmittal or any Common Stock Certificate(s) or stock
power(s) are signed by a trustee, executor, administrator, guardian, officer of
a corporation, attorney-in-fact or any other person acting in a representative
or fiduciary capacity, the person signing must give such person's full title in
such capacity and appropriate evidence of authority to act in such capacity must
be forwarded with this Letter of Transmittal.
 
     4.  Lost or Destroyed Certificates.  If your Common Stock Certificates have
been either lost or destroyed, please make note of this fact on the front of
this Letter of Transmittal opposite your name and address and the appropriate
forms for replacement will be sent to you. You will then be instructed as to the
steps you must take in order to receive any checks or, in the case of proration,
a stock certificate(s) representing Non-Cash Election Shares.
 
     5.  Checks or New Certificates in Same Name.  If any checks or, in the case
of proration, Common Stock Certificate(s) representing Non-Cash Election Shares
are to be made payable to the order of, or registered in, exactly the same
name(s) that appears on the Common Stock Certificate(s) representing shares of
Panavision Common Stock submitted with this Letter of Transmittal, no
endorsement of Common Stock Certificate(s) or separate stock power(s) is
required.
 
     6.  Checks or New Certificates in Different Name.  If the section entitled
'Special Payment Instructions' (BOX II) is completed, then signatures on this
Letter of Transmittal must be guaranteed by a firm that is a bank, broker,
dealer, credit

<PAGE>

union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents' Medallion Program (each an 'Eligible
Institution'). If the surrendered certificates are registered in the name of a
person other than the signer of this Letter of Transmittal, or if the issuance
is to be made to a person other than the signer of this Letter of Transmittal,
or if the issuance is to be made to a person other than the registered owner(s),
then the surrendered Common Stock Certificates must be endorsed or accompanied
by duly executed stock powers, in either case signed exactly as the name(s) of
the registered owners appear on such certificate(s) or stock power(s), with the
signatures on the Common Stock Certificate(s) or stock power(s) guaranteed by an
Eligible Institution as provided herein.
 
     7.  Special Delivery Instructions.  If the checks are to be payable to the
order of, or the certificates for Non-Cash Election Shares are to be registered

in, the name of the registered holder(s) of shares of Panavision Common Stock,
but are to be sent to someone other than the registered holder(s) or to an
address other than the address of the registered holder, it will be necessary to
indicate such person or address in the Section entitled 'Special Delivery
Instructions' (BOX III).
 
     8.  Miscellaneous.  A single check or, in the case of proration, a single
stock certificate representing Non-Cash Election Shares will be issued.
 
     All questions with respect to this Letter of Transmittal will be determined
by Panavision and PX Holding, which deter mination shall be conclusive and
binding.
 
     9.  Backup Federal Income Tax Withholding and Substitute Form W-9.  Under
the 'backup withholding' provisions of Federal income tax law, the Exchange
Agent may be required to withhold 31% of the amount of any cash payments made to
holders of Panavision Common Stock pursuant to the Merger. To prevent backup
withholding, each holder must complete and sign the Substitute Form W-9 included
in this Form and either: (a) provide the correct taxpayer identification number
('TIN') and certify, under penalties of perjury, that the TIN provided is
correct (or that such holder is awaiting a TIN), and that (i) the holder has not
been notified by the Internal Revenue Service ('IRS') that the holder is subject
to backup withholding as a result of failure to report all interest or
dividends, or (ii) the IRS has notified the holder that the holder is no longer
subject to back withholding; or (b) provide an adequate basis for exemption from
backup withholding. If the box in Part 2 of the substitute Form W-9 is checked,
the Exchange Agent shall retain 31% of cash payments made to a holder during the
sixty (60) day period following the date of the Substitute Form W-9. If the
holder furnishes the Exchange Agent with his or her TIN within sixty (60) days
of the date of the Substitute Form W-9, the Exchange Agent shall remit such
amounts retained during the sixty (60) day period to the holder and no further
amounts shall be retained or withheld from cash payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent with his
or her TIN within such sixty (60) day period, the Exchange Agent shall remit
such previously retained amounts to the IRS as backup withholding and shall
withhold 31% of all cash payments to the holder thereafter until the holder
furnishes a TIN to the Exchange Agent. In general, if a holder is an individual,
the TIN is the Social Security number of such individual. If the Common Stock
Certificates for Panavision Common Stock are registered in more than one name or
are not in the name of the actual owner, consult the Guidelines of the IRS for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the Exchange Agent is not
provided with the correct TIN or an adequate basis for exemption from backup
withholding, the holder may be subject to a $50 penalty imposed by the IRS and
backup withholding at a rate of 31%. Certain holders (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. In order to satisfy the Exchange
Agent that a foreign individual qualifies as an exempt recipient, such holder
must submit a statement (generally, IRS Form W-8), signed under penalties of
perjury, attesting to that individual's exempt status. A form for such
statements can be obtained from the Exchange Agent.
 
     For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not

have one and how to complete the Substitute Form W-9 if Panavision Common Stock
is held in more than one name), consult the Guideline of the IRS for
Certification of Taxpayer Identification Number on Substitute Form W-9.
 
     Failure to complete the Substitute Form W-9 will not, by itself, cause
Panavision Common Stock to be deemed invalidly tendered, but may require the
Exchange Agent to withhold 31% of the amount of any cash payments made pursuant
to the Merger. Backup withholding is not an additional federal income tax and
may be claimed as a credit against the U.S. federal income tax liability of a
holder of Panavision Common Stock, provided that the required information is
furnished to the IRS. If backup withholding results in an overpayment of federal
income taxes, a refund may be obtained.
 
     Additional copies of this Form may be obtained from D.F. King & Co., Inc.
as Information Agent (whose telephone number is (212) 269-5550 (Call Collect) or
1-800-758-5378 (Toll Free)).

<PAGE>

                           IMPORTANT TAX INFORMATION
 
     In order to ensure compliance with federal income tax requirements, each
holder of shares of Panavision Common Stock is requested to provide the Exchange
Agent with his or her correct Taxpayer Identification Number and to certify
whether he or she is subject to backup federal income tax withholding by
completing and signing the Substitute Form W-9 below. See Instruction D10 and
accompanying Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
 
<TABLE>
<CAPTION>
                           PAYER'S NAME: CHASE MELLON SHAREHOLDER SERVICES, L.L.C.
<S>                             <C>                                                  <C>
                                PART 1--Please provide your TIN in the box at right
                                and certify by signing and dating below. For
SUBSTITUTE                      individuals, this is your social security number.    ------------------------
FORM W-9                        is your social security number.                       Social Security Number
DEPARTMENT OF THE TREASURY                                                                      or
INTERNAL REVENUE SERVICE                                                             Taxpayer Identification
                                                                                              Number
PAYOR'S REQUEST FOR             PART 2--Awaiting TIN / /
TAXPAYER IDENTIFICATION
NUMBER ('TIN')                  CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number
                                Identification Number (TIN) shown on this form is my correct taxpayer
                                identification number (or I am waiting for a number to be issued to me) and
                                (2) I am not subject to backup withholding either because (a) I am exempt
                                from backup withholding, (b) I have not been notified by the Internal Revenue
                                Service (IRS) that I am subject to backup withholding as a result of the
                                failure to report all interest or dividends, or (c) the IRS has notified me
                                that I am no longer subject to backup withholding.

                                Signature                                      Date
                                         -------------------------------------     ------------------------


                                You must cross out item (2) above if you have been notified by the IRS that
                                you are currently subject to backup withholding because of under reporting
                                interest or dividends on your tax return. However, if after being notified by
                                the IRS that you were subject to backup withholding, you receive another
                                notification from the IRS that you are no longer subject to backup
                                withholding, do not cross out such item (2).
</TABLE>
 
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
      IMPOSED BY THE IRS AND BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE
      TO YOU PURSUANT TO THE MERGER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
      CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
      ADDITIONAL DETAILS.
 
      YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
      2 OF THE SUBSTITUTE FORM W-9.
 
            CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me, and
either that (i) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Office or (ii) I
intend to mail or deliver an application in the near future. I understand that
if I do not provide a TIN by the time of payment, 31% of all reportable payments
made to me will be withheld, but that such amounts will be refunded to me if I
then provide a TIN within sixty (60) days.

Signature                                    Date 
          -------------------------------        -------------------------------



<PAGE>

                         NOTICE OF GUARANTEED DELIVERY
                                      FOR
      NON-CASH ELECTION SHARES IN THE EVENT A HOLDER ELECTS TO RETAIN ALL
              OR A PORTION OF HIS OR HER SHARES OF COMMON STOCK OF
                                PANAVISION INC.
                        IN CONNECTION WITH THE MERGER OF
                             PX MERGER CORPORATION,
                           A CORPORATION ORGANIZED BY
                            PX HOLDING CORPORATION,
                                 WITH AND INTO
                                PANAVISION INC.
                   (NOT TO BE USED FOR SIGNATURE GUARANTEES)
 
   THE DEADLINE FOR SUBMITTING THIS FORM TO THE EXCHANGE AGENT IS 5:00 P.M.,
            NEW YORK CITY TIME, ON JUNE [  ], 1998 UNLESS EXTENDED.
 
     This form must be used to retain shares of common stock, par value $.01 per
share (the 'Shares') of Panavision Inc., a Delaware corporation (the 'Company')
in connection with the Merger of PX Merger Corporation with and into the
Company, as contemplated by, and subject to the terms and conditions of, the
Agreement of Recapitalization and Merger (the'Recapitalization Agreement'),
dated as of December 18, 1997, by and among the Company, PX Holding Corporation
and PX Merger Corporation, and Instruction D of the related Form of Election
(the 'Form of Election'), if certificates for Shares, are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary on or prior to the Election Date (as defined in the accompanying
Proxy Statement). This form may be delivered by hand, facsimile transmission, or
mail to the Exchange Agent.
 
                     THE EXCHANGE AGENT FOR THE MERGER IS:
                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
 
<TABLE>
<S>                                  <C>                                        <C>
             BY MAIL:                       BY FACSIMILE TRANSMISSION:              BY HAND OR OVERNIGHT COURIER:
 
 ChaseMellon Shareholder Services,                 (for Eligible                  ChaseMellon Shareholder Services,
              L.L.C.                            Institutions Only):                            L.L.C.
           P.O. Box 3301                          (201) 329-8936                         85 Challenger Road
South Hackensack, New Jersey 07606           Fax confirmation number:                      Mail Drop-Reorg
                                                  (201) 296-4860                  Ridgefield Park, New Jersey 07660
                                                                                Attention: Reorganization Department
</TABLE>
 
     DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUMENTS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
 
     THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A FORM OF ELECTION IS REQUIRED TO BE GUARANTEED BY
AN 'ELIGIBLE INSTITUTION' (AS DESCRIBED IN INSTRUCTION D7 OF THE FORM OF

ELECTION). UNDER THE INSTRUCTION THERETO, SUCH SIGNATURE GUARANTEES MUST APPEAR
IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE FORM OF ELECTION.
 
     The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Form of Election or an Agent's
Message and certificates for Shares to the Depositary within the time period
shown herein. Failure to do so could result in financial loss to such Eligible
Institution.
 
              THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.

<PAGE>

Ladies and Gentlemen:
 
     The undersigned hereby elects to have all or a portion of the shares of
common stock of Panavision Inc. represented by this Notice of Guaranteed
Delivery become the right to retain one fully paid and nonassessable share of
Panavision Common Stock (a 'Non-Cash Election Share'), upon the terms and
subject to the conditions set forth in the Agreement Plan of Recapitalization
and Merger, dated as of December 18, 1997, by and among Panavision Inc., PX
Holding Corporation and PX Merger Corporation, and the related Form of Election,
receipt of which are hereby acknowledged, pursuant to the guaranteed delivery
procedure set forth in Instruction A1 of the Form of Election.
 
<TABLE>
<S>                                               <C>
Number of Shares:                                 Name(s) of Record Holder(s):
                 -----------------------------            
Certificate No(s) (if available):

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

- ----------------------------------------------    ---------------------------------------------------
                                                                                       (PLEASE PRINT)

                                                  Address(es):
                                                              ---------------------------------------

                                                  ---------------------------------------------------
                                                                                           (ZIP CODE)

Name of Tendering Institution:
 
Check one box if securities will be tendered      Area Code and Telephone No(s):
by book-entry transfer:
                                                  ---------------------------------------------------
/ / The Depository Trust Company                   
                                                  Signature(s):
/ / Philadelphia Depository Trust Company                      --------------------------------------

                                                  ---------------------------------------------------
Account No.:
             ----------------------------- 

Dated                                 , 1998
      -------------------------------- 
</TABLE>

<PAGE>

                                   GUARANTEE
                    (NOT TO BE USED FOR SIGNATURE GUARANTEE)
 
     The undersigned, a bank, broker, dealer, credit union, savings association
or other entry that is a member in good standing of the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program, the Stock Exchange Medallion Program, or a bank, broker,
dealer, credit union, savings association or other entity that is an 'eligible
guarantor institution,' as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, guarantees the delivery to the
Depositary of the Shares tendered hereby, together with a properly completed and
duly executed Form of Election (or manually signed facsimile(s) thereof) and any
other required documents, or an agent's message in the case of a book-entry
delivery of Shares, all within [three trading days] of the date hereof. A
'trading day' is any day on which the New York Stock Exchange is open for
business.
 
<TABLE>
<S>                                               <C>
                                                  -----------------------------------------
                                                           (AUTHORIZED SIGNATURE)

Name of Firm:                                     Title:
             -----------------------------------        -----------------------------------
                                                  Name:
                                                       ------------------------------------
                                                             (PLEASE PRINT OR TYPE)
Address:                                          Area Code and Telephone No.:
        ----------------------------------------                              -------------  

                                                  
                                                  Dated:
        ----------------------------------------        ------------------------------------
                                      (ZIP CODE)
</TABLE>
 
    DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--CERTIFICATES SHOULD
                       BE SENT WITH THE FORM OF ELECTION.



<PAGE>


FORM OF SOLVENCY OPINION


                                 June__, 1998


Boards of Directors of
PX HOLDING CORPORATION
PANAVISION INC.

THE CHASE MANHATTAN BANK
as Lender, Issuing Lender and Administrative Agent,

the several Lenders that are parties to
the Credit Agreement referred to below, and

Ladies and Gentlemen:

This letter is furnished at the request of: (i) PX Holding Corporation ("PX
Holdings"), pursuant to Section 5.1(i) of the Credit Agreement, dated as of
May __, 1998 (the "Credit Agreement") among Panavision Inc. (the "Borrower"),
the several lenders from time to time that are parties to the Credit Agreement
(each a "Lender" and, collectively, the "Lenders"), Chase Securities Inc., as
Arranger, and The Chase Manhattan Bank, as Administrative Agent; and (ii) the
Borrower, pursuant to Section 6.1(c) of the Recapitalization Agreement. Unless
defined herein all defined terms are as defined in the Credit Agreement.

Pursuant to the Recapitalization Agreement, PX Merger Corporation, a wholly
owned subsidiary of PX Holdings, will be merged with and into the Borrower
(the "Merger"), and stockholders of Panavision other than Warburg Pincus
Capital Company L.P. ("Warburg") (such other stockholders, the "Holders") will
have the opportunity to elect to have their shares of Borrower common stock,
par value $.01 per share ("Borrower Common Stock"), converted into the right
to receive $27.00 in cash per share. To the extent that Holders of more than
88% of the shares of Borrower Common Stock elect to have their shares
converted into the right to receive cash, the election is subject to
proration. Shares of Borrower Common Stock not converted into the right to
receive cash will remain outstanding.

Concurrent with the execution of the Recapitalization Agreement, Warburg,
Borrower and Mafco Holdings Inc. ("Mafco Holdings") entered into the
Stockholders Agreement under which Warburg


<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 2


has agreed to vote all Warburg shares (the "Warburg Shares") for the Merger
and also granted to certain officers of Mafco Holdings an irrevocable proxy
with respect to the Warburg Shares. Pursuant to the Stockholders Agreement,
Warburg also agreed to exchange 88% of its shares of Borrower Common Stock for
preferred stock of Borrower (the "Redeemable Preferred Shares") that shall be
redeemed immediately upon consummation of the Merger at a price equivalent to
$26.50 in cash per share of Borrower Common Stock (the "Warburg Redemption").
To the extent that fewer than 88% of the Holders' shares are exchanged for
cash, Warburg will increase the number of shares of Borrower Common Stock it
exchanges for Redeemable Preferred Shares (or will sell such shares to PX
Holdings) up to the remainder of its shares of Borrower Common Stock.

Immediately prior to the consummation of the Merger, PX Holdings will purchase
shares of Borrower Common Stock from Borrower (or in certain circumstances
directly from Warburg) (such purchase, together with the Merger and the
Warburg Redemption, the "Recapitalization"). The number of shares of Borrower
Common Stock to be purchased by PX Holdings and the price to be paid therefore
is dependent upon the number of shares of Borrower Common Stock converted into
the right to receive $27.00 in cash pursuant to the Merger. Assuming an
aggregate of 88% of the shares of Borrower Common Stock are so converted, PX
Holdings would purchase approximately 5.8 million shares of Borrower Common
Stock, which would constitute 72% of the Borrower Common Stock outstanding
immediately following consummation of the Merger, at a price of $26.69 per
share, or an aggregate of approximately $154 million.

The Recapitalization will be financed by: (a) approximately $61.8 million of
borrowings under the Total Revolving Credit Commitments; (b) $240.0 million of
Term Loans; (c) $150.0 million of gross proceeds from Senior Subordinated
Notes issued by PX Escrow Corp., a wholly owned subsidiary of PX Holdings, and
in connection with the Recapitalization, the Borrower will assume all
obligations with respect thereto; (d) approximately $154.4 million of common
equity contributed to PX Holdings by the Equity Investor; and (e) existing
cash of approximately $4.8 million. The proceeds described in the preceding
sentence will: (a) pay the equity purchase price of $473.4 million; (b) repay
the indebtedness under the Existing Credit Agreement of $120.6 million; and
(c) pay transaction fees and expenses related to the Recapitalization of $17.0
million.

The Credit Agreement consists of: (a) Tranche A Term Loans of $90.0 million;
(b) Tranche B Term Loans of $150.0 million; and (c) $100.0 million of Total
Revolving Credit Commitments which include a subfacility for the issuance of
Letters of Credit in an aggregate undrawn face amount at any one time
outstanding not to exceed $20.0 million. The proceeds of the Loans shall be
used to finance a portion of the Recapitalization, to repay amounts

outstanding under the Existing Credit Agreement, to pay fees and expenses
related to the foregoing and to finance the working capital and general
corporate needs of the recapitalized Borrower and its subsidiaries. Loans
under the Credit Agreement will be either ABR Loans or Eurodollar Loans (or a
combination thereof).


<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 3


Interest on outstanding ABR Loans shall be payable on the last day of each
March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin. Interest on any outstanding
Eurodollar Loans shall be payable the last day of each Interest Period,
provided, that for any Eurodollar Loan having an Interest Period longer than
three months, each day which is three months after the first day of such
Interest Period and the last day of such Interest Period, at a rate per annum
equal to the Eurodollar Rate plus the Applicable Margin. The Applicable Margin
shall be adjusted upon the Borrower achieving certain Consolidated Total
Leverage Ratios as specified in the Applicable Margin pricing grid.

The Tranche A Term Loans shall be repaid in 20 consecutive quarterly
installments commencing on June 30, 1999 in the amounts set forth in Section
2.3(a) of the Credit Agreement. The Tranche B Term Loans shall be repaid in 24
consecutive quarterly installments commencing on June 30, 1999 in the amounts
set forth in Section 2.3(b) of the Credit Agreement. The Total Revolving
Extensions of Credit shall be payable in full on the Scheduled Revolving
Credit Termination Date. The Borrower may elect or be required to prepay the
Loans or terminate or, from time to time, reduce their aggregate Commitments
under the Credit Agreement subject to various terms and conditions as outlined
in Sections 2.8, 2.9 and 2.10 of the Credit Agreement.

All obligations of the Borrower under the Credit Agreement shall be secured by
a perfected first priority security interest in all tangible and intangible
domestic assets (including, without limitation, intellectual property, real
property and all of the capital stock of each of the Borrower's direct and
indirect domestic subsidiaries and 65% of the capital stock of first-tier
foreign subsidiaries, except for those assets as to which the Administrative
Agent shall determine in its sole discretion that the costs of obtaining such
a security interest are excessive in relation to the value of the security to
be afforded thereby). The obligations of the Borrower under the Credit
Agreement will also be unconditionally guaranteed by each of the direct and
indirect domestic subsidiaries of the Borrower.

The Senior Subordinated Notes will be unsecured obligations of the Borrower,
and will mature on February 1, 2006. The Senior Subordinated Notes were issued

at a substantial discount from their face amount priced to yield to maturity 9
5/8 % per annum. Cash interest will not accrue on the Senior Subordinated
Notes prior to February 1, 2002. Thereafter, interest will accrue and will be
payable, in cash, semi-annually in arrears on February 1 and August 1 of each
year, commencing August 1, 2002. The Senior Subordinated Notes will be
redeemable, at the Borrower's option, in whole or in part, on or after
February 1, 2002, at the redemption prices set forth in the confidential
offering circular dated February 6, 1998 (the "Confidential Offering
Circular"). Prior to February 1, 2002, the Senior Subordinated Notes will be
redeemable at the option of the Borrower, in whole but not in part, at a
redemption price equal to the accreted value on the date of redemption plus
the applicable premium. On or prior to February 1, 2001, in connection with
certain public offerings of common stock, the Borrower may, at its option,
redeem the Senior Subordinated Notes at a redemption price equal to 109.625% of
the accreted value on the date of redemption, provided that 

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Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 4

at least $141.637 million aggregate principal amount at maturity of the Senior
Subordinated Notes remains outstanding after each such redemption. Redemptions
of the Senior Subordinated Notes are subject to limitations imposed by Section
7.9 of the Credit Agreement. The Senior Subordinated Notes will be unsecured
senior obligations of the Borrower and will be subordinated in right of payment
to all existing and future senior debt of the Borrower. The Senior Subordinated
Notes will rank pari passu in right of payment with all other senior
subordinated indebtedness of the Borrower, if any, and will rank senior to any
subordinated indebtedness of the Borrower. Under certain circumstances, certain
subsidiaries of the Borrower may be required in the future to guarantee the
Senior Subordinated Notes on a senior subordinated basis.

We have been provided with an estimated September 30, 1997 pro forma closing
balance sheet (the "Pro Forma Balance Sheet") of the Borrower and its
Subsidiaries, on a consolidated basis, prepared by management of the Borrower
and included in the Confidential Information Memorandum. The Pro Forma Balance
Sheet indicates that the capitalization of the Borrower and its Subsidiaries
on the Closing Date, after giving effect to the Recapitalization and all
indebtedness related thereto will be comprised of approximately $42.7 million
of current liabilities, $452.1 million of long-term debt, $7.6 million of
other long-term liabilities, and a stockholder's equity deficit balance of
$224.9 million. Management of the Borrower has informed us that the foregoing
amounts were determined in accordance with GAAP and are not intended to
reflect fair market value.

Murray, Devine & Co., Inc. has been requested to provide its opinion that, on
the Closing Date, as contemplated herein, and after giving effect to the
Recapitalization and all related indebtedness to be incurred in connection
therewith, with respect to the Borrower and its Subsidiaries, on a

consolidated basis, that:

                         1) the fair value of the assets of the Borrower and
                    its Subsidiaries on a consolidated basis will exceed their
                    total liabilities (including contingent, subordinated,
                    unmatured and unliquidated liabilities);

                         2) the present fair saleable value of the assets of
                    the Borrower and its Subsidiaries on a consolidated basis
                    will be greater than the amount required to pay their
                    probable liabilities on their existing debts as they
                    become absolute and matured;

                         3) the Borrower and its Subsidiaries, on a
                    consolidated basis, have the ability to pay their debts
                    and liabilities (including contingent, subordinated,
                    unmatured and unliquidated liabilities) as they mature;

                         4) the total consideration used by the Borrower and
                    its Subsidiaries to redeem the Redeemable Preferred Stock
                    will not cause an impairment of capital; and


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Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 5


                         5) the Borrower and its Subsidiaries, on a
                    consolidated basis, do not have an unreasonably small
                    amount of capital with which to conduct their business.

In evaluating the foregoing, the subject phrases and the definitions ascribed
thereto are as follows:

         " the assets of the Borrower and its Subsidiaries" - All assets of
         the Borrower and its Subsidiaries, recorded on a consolidated basis.
         Such assets shall include all current assets, all fixed assets such
         as property, plant and equipment and all intangible assets including
         contracts, tradenames, trademarks, backlog, licenses, patents and
         other intangible assets including those in the nature of goodwill and
         going concern value.

         "fair value" - The total amount at which the assets of the Borrower
         and its Subsidiaries, on a consolidated basis, would likely sell as
         part of a going concern and for continued use as part of a going
         concern, within a commercially reasonable period of time, between one
         or more willing buyers and a willing seller with neither party being
         under any compulsion to buy or sell and with all parties having

         reasonable knowledge of all facts.

         "impairment of capital" - The total consideration used by the
         Borrower and its Subsidiaries to redeem the Redeemable Preferred
         Stock exceeds, immediately prior to the Recapitalization, the excess
         of the net assets of the Borrower and its Subsidiaries over the par
         value of the Borrower's issued and outstanding Borrower Common Stock.

         "present fair saleable value" - The price that could be obtained in
         one or more arm's length transactions by an independent, willing
         seller from an independent willing buyer with reasonable promptness,
         each having reasonable knowledge of the relevant facts and neither
         being under any compulsion to act and with equity to both.

         "liabilities (including contingent, subordinated, unmatured and
         unliquidated liabilities)" - The pro forma debts and liabilities of
         the Borrower and its Subsidiaries, recorded on a consolidated basis,
         as of the Closing Date as set forth on the Pro Forma Balance Sheet as
         prepared by management of the Borrower, including all fees, expenses,
         and the principal amount of indebtedness being incurred in connection
         with the Recapitalization through borrowings under the Credit
         Agreement and Senior Subordinated Notes plus the Borrower's and its
         Subsidiaries' estimated amount of reasonably anticipated liabilities
         that may result from contingencies, which liabilities may or may not
         meet the criteria for accrual under Statement of Financial Accounting
         Standards ("SFAS") No. 5 of the Financial Accounting Standards Board
         (Accounting for Contingencies) and, therefore, may not be included in
         liabilities under GAAP, including: a) pending litigation, asserted 

<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 6

         claims and assessments, guarantees,  and other contingent liabilities
         including, without limitation,  employee benefit plan liabilities
         relating to retiree benefits  identified to us by responsible officers
         of the Borrower, as well as,  b) contingent liabilities relating to
         environmental matters identified  to us by responsible officers of the
         Borrower.

We have undertaken certain analyses and procedures relating to the preparation
of the requested opinion. The procedures undertaken, none of which extended
past the date of this letter, consisted solely of the following:

                    1. Reviewed the Credit Agreement (Draft 3/30/98). Read the
                    available exhibits and schedules thereto.

                    2. Reviewed the Recapitalization Agreement.


                    3. Reviewed the Stockholders Agreement.

                    4. Reviewed the Confidential Information Memorandum dated
                    January 1998, prepared by the Administrative Agent.

                    5. Reviewed the Confidential Offering Circular.

                    6. Reviewed the Senior Subordinated Note Indenture.

                    7. Reviewed the Preliminary Proxy Statement of the
                    Borrower as filed with the Securities and Exchange
                    Commission on Schedule 14A, dated February 5, 1998 and
                    Amendment No. 1 thereto.

                    8. Reviewed the unaudited pro forma condensed consolidated
                    balance sheet as of December 31, 1997 contained in Form
                    8-K/A filed with the SEC on January 27, 1998.

                    9. Performed a valuation of the Borrower and its
                    Subsidiaries, on a consolidated basis, using current
                    standards of valuation including discounted free cash flow
                    and comparable market multiples approaches as a going
                    concern after giving effect to the Recapitalization and the
                    related financing.

                    10. Reviewed the audited historical financial statements of
                    the Borrower reported on by Ernst & Young LLP, as of
                    December 31, 1997 and 1996 and for the fiscal years ended,
                    December 31, 1997, and 1996 

<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 7

                    and 1995. In this regard, management of the Borrower has
                    informed us that no subsequent audited financial statements
                    exist.

                    11. Reviewed the unaudited interim financial statements of
                    the Borrower as of March 31, 1998 and for the three months
                    then ended. In this regard, management of the Borrower has
                    informed us that no other unaudited interim historical
                    financial statements exist for any date or period
                    subsequent to March 31, 1998.

                    12. Reviewed the Pro Forma Balance Sheet, prepared by
                    management of the Borrower. With respect to the amounts
                    shown in the Pro Forma Balance Sheet and accompanying
                    notes and schedules thereto, we have made inquiries of

                    certain officers of the Borrower who have responsibility
                    for financial and accounting matters regarding:

                               a) the basis for the assumptions and the
                               information presented in the Pro Forma Balance
                               Sheet and the consistency of such assumptions
                               and information with the Recapitalization and
                               related financing, including the Credit
                               Agreement and Senior Subordinated Notes; and

                               b) whether the Pro Forma Balance Sheet includes
                               all material assets and liabilities which it is
                               anticipated will have to be recorded under GAAP
                               after giving effect to the Recapitalization
                               and related financing.

                    13. Inquired of certain officers of the Borrower, as
                    appropriate, who have responsibility for financial and
                    accounting matters regarding:

                               a) whether they were aware of any material
                               liabilities or loss contingencies that are 
                               required to be accrued or disclosed by SFAS  No.
                               5 or that would be material to the Borrower or
                               its Subsidiaries, whether or not required to be
                               disclosed under SFAS No. 5, or any unasserted
                               claims or assessments that their legal counsel
                               has advised them are probable of assertion and
                               must be disclosed in accordance with SFAS No. 5;
                               and

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Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 8


                               b) whether they were aware of any events or
                               conditions that, as of the date thereof, would
                               cause the Borrower and its Subsidiaries, on a
                               consolidated basis, after giving effect to the
                               Recapitalization and related financing, not to
                               be Solvent, as defined in Section 1.1 of the
                               Credit Agreement.

                    14. Reviewed the multi-year financial model of the Borrower
                    on a consolidated basis, after giving effect to the
                    Recapitalization and related financing, prepared by
                    management of the Borrower (the "Projections"), included
                    in the Confidential Information Memorandum. In this regard,

                    made inquiries to certain officers of the Borrower who have
                    responsibility for financial and accounting matters, with
                    respect to those assumptions which have been made in
                    formulating the Projections.

                    15. Reviewed the minutes and written consents of the board
                    of directors of the Borrower for the period September 16,
                    1996 to February 20, 1998.

                    16. Conducted interviews with those individuals responsible
                    for management of the Borrower and its Subsidiaries for
                    purposes of reviewing their operations and reviewing such
                    operations in terms of their past operating results, markets
                    served and their ability to attain operating results
                    consistent with the forecasted results set forth in the
                    Projections.

                    17. Conducted interviews with those responsible for the
                    legal affairs of the Borrower and its Subsidiaries regarding
                    any litigation to which the Borrower, or its Subsidiaries,
                    are currently a party and any claims or causes of actions
                    which may be probable of legal assertion against them which
                    would be reasonably likely to have a material adverse effect
                    on the business, condition (financial or otherwise),
                    operations, performance, properties or prospects of the
                    Borrower or its Subsidiaries. We further discussed whether
                    the Borrower or its Subsidiaries are currently involved in,
                    or are expected to be involved in, any investigation or
                    enforcement action by any governmental body which may result
                    in the imposition of any sanctions, fines, or penalties, the
                    effect of which could have a material adverse effect on the
                    business, condition (financial or otherwise), operations, 


<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 9

                    performance, properties or prospects of the Borrower or its
                    Subsidiaries.

                    18. Conducted interviews with the management of the
                    Borrower and its subsidiaries to discuss their assertions
                    concerning contingent liabilities that are not recorded in
                    the historical financial statements, the Pro Forma Balance
                    Sheet or the Projections.

We have not made any independent investigation in rendering this opinion other
than the examination described. Our opinion is, therefore, qualified by the

scope of that examination.

Based solely upon the foregoing, and subject to the other qualifications set
forth below, on the Closing Date and after giving effect to the
Recapitalization and to all indebtedness to be incurred in connection
therewith, we are of the opinion, with respect to the Borrower and its
Subsidiaries, on a consolidated basis, that:

                         1) the fair value of the assets of the Borrower and
                    its Subsidiaries on a consolidated basis will exceed their
                    total liabilities (including contingent, subordinated,
                    unmatured and unliquidated liabilities);

                         2) the present fair saleable value of the assets of
                    the Borrower and its Subsidiaries on a consolidated basis
                    will be greater than the amount required to pay their
                    probable liabilities on their existing debts as they
                    become absolute and matured;

                         3) the Borrower and its Subsidiaries, on a
                    consolidated basis, have the ability to pay their debts
                    and liabilities (including contingent, subordinated,
                    unmatured and unliquidated liabilities) as they mature;

                         4) the total consideration used by the Borrower and
                    its Subsidiaries to redeem the Redeemable Preferred Stock
                    will not cause an impairment of capital; and

                         5) the Borrower and its Subsidiaries, on a
                    consolidated basis, do not have an unreasonably small
                    amount of capital with which to conduct their business.

In rendering the opinion set forth above, we call to your attention that
management of the Borrower has prepared Projections that show the Borrower
with outstanding Loans under the Revolving Credit Commitment after the
Scheduled Revolving Credit Termination Date and assuming a 

<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 10

refinancing in order to repay the Term Loans at final maturity. Management
believes that the Borrower will be able to renew its Revolving Credit Commitment
when such commitment expires and will be able to effect a refinancing of its
Term Loans at final maturity. We have assumed, with your consent, that the
Borrower will be able to renew its Revolving Credit Commitment when such
commitment expires and effect a refinancing of its Term Loans at final maturity.
Assuming such a refinancing and based on the Borrower's financial position at
the end of the Projections, and if trends indicated in the Projections continue,

the Borrower should be able to generate sufficient cash flows to fully repay the
remaining Loans in the year following the final year of the Projections. We
believe the Borrower should be able to effect such a refinancing, considering
the Borrower's operating results and financial condition as presented in the
Projections, assuming, with your consent, that the future economic climate for
such refinancings will not be materially worse than present economic conditions.

Additionally, we call to your attention that management of the Borrower has
prepared Projections that do not extend to the period in which the Senior
Subordinated Notes mature. Management believes that the amounts due under the
Senior Subordinated Notes at the time of maturity will be repaid through cash
flows from operations, a new financing, merger, sale of assets or sale of the
Borrower's common equity. We have assumed, with your consent, that the
remaining amounts under the Senior Subordinated Notes will be repaid by the
Borrower at the time of maturity through cash flows from operations, a new
financing, merger, sale of assets or sale of the Borrower's common equity.
Based on the Borrower's financial position at the end of the Projections, we
believe the Borrower should be able to effect a new financing, merger, sale of
assets or sale of the Borrower's common equity, considering the Borrower's
operating results and financial condition as presented in the Projections,
assuming, with your consent, that the future economic climate for such
transactions will not be materially worse than present economic conditions.

In rendering the above opinion, we have relied upon certain past and current
unaudited financial information which has not been independently verified and
for which we assume no responsibility as to its accuracy. Nothwithstanding that
we have not verified such information, nothing has come to our attention that
would lead us to believe that it was unreasonable to rely upon the provided
information. Further, we have assumed good title to the assets of the Borrower
and its Subsidiaries and have made no inspection of those assets for the purpose
of determining the value of such assets, both of which we expressly disclaim
responsibility for in connection with the rendering of this opinion.

In rendering the above opinion, based upon our analysis and management's
projections, we believe it was appropriate to value the Borrower and its
Subsidiaries as a going concern.

This letter is intended solely for use of the addressees in connection with the
Recapitalization and related financing and is not to be relied upon by any other
person or entity, other than the addressees and assignees pursuant to Section
10.6 of the Credit Agreement, or for any other purpose without 

<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 11


our prior written consent. This letter is not to be disclosed or otherwise
circulated, quoted or referred to any persons or entities other than the

addressees and assignees pursuant to Section 10.6 of the Credit Agreement
without our written consent (which will not be unreasonably withheld).
Notwithstanding anything to the contrary in the immediately preceding sentence,
our consent shall not be required for any of the following: (i) submitting
copies of this opinion to counsel or advisors to the Administrative Agent, the
Issuing Lender, the Lenders, or the Borrower; (ii) furnishing this opinion upon
the demand or order of any court, administrative agency or regulatory body or as
may be required in response to any summons or subpoena; (iii) attaching this
opinion as an exhibit to the Credit Agreement; (iv) furnishing this opinion as
may be required or ordered in, or as may be necessary, to protect the
Administrative Agent's, the Issuing Lender's, a Lender's, or the Borrower's
interest in, any litigation, governmental or bankruptcy proceeding or
investigation pertaining to the Credit Agreement, or related transactions to
which the Administrative Agent, the Issuing Lender, any Lender, or the Borrower
is or may be subject (whether or not named as a party in such proceeding); or
(v) furnishing this opinion to a governmental agency as otherwise required by
any law, order, regulation or ruling applicable to such Administrative Agent,
Issuing Lender, Lender, or the Borrower.

This letter is also delivered with the explicit understanding that it is based
on current standards of valuation and assessment and that standards of
valuation and assessment may change in the future. We disclaim any
responsibility for any impact any such changes may have on the valuation or
assessment of the Borrower and its Subsidiaries described in this letter.
Except as contemplated by the Projections referred to in paragraph 14,
unforeseen future events which may change the current or projected value of
the Borrower and its Subsidiaries do not apply and have not been factored into
the opinion expressed in this letter.

This letter is a financial opinion only. We make no representations regarding
questions of legal interpretation and expressly disclaim that it be construed in
any way as a legal opinion. This opinion is delivered to each recipient subject
to the conditions, scope of the engagement, limitations and understandings set
forth in this opinion and subject to the understanding that the obligations of
Murray, Devine & Co., Inc. in the Recapitalization are solely corporate
obligations, and no officer, director, employee, agent, shareholder or
controlling person of Murray, Devine & Co., Inc. shall be subjected to any
personal liability whatsoever to any person, nor will any such claim be asserted
by or on behalf of the Borrower, any of its Subsidiaries or affiliates. Further,
it is understood that in no event, regardless of the legal theory advanced,
shall Murray, Devine & Co., Inc. be responsible to the Borrower, any of its
Subsidiaries or affiliates other than for its gross negligence, bad faith,
willful misconduct or reckless disregard of its obligations.

We have no obligation to update or revise this letter for any events occurring
subsequent to the date of this letter.



<PAGE>


Board of Directors
PX HOLDING CORPORATION
THE CHASE MANHATTAN BANK
June __, 1998
Page 12



                                                Very truly yours,


                                                MURRAY, DEVINE & CO., INC.




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