
<PAGE>

                                                                  EXHIBIT (A)(2)
 
                             Letter of Transmittal
                       To Tender Shares of Common Stock
 
                                      of
 
                              AG Associates, Inc.
 
           Pursuant to the Offer to Purchase dated January 22, 1999
 
                                      by
 
                          MIG Acquisition Corporation
 
                         a wholly owned subsidiary of
 
                         STEAG Electronic Systems GmbH
 
       THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
       12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999,
                         UNLESS THE OFFER IS EXTENDED.
 
 
                       The Depositary for the Offer is:
 
                               BANKBOSTON, N.A.
 
<TABLE>
<S>                                <C>                                <C>
                                       By Overnight, Certified or
      By First Class Mail:               Express Mail Delivery:                         By Hand:
 
        BankBoston, N.A.                    BankBoston, N.A.           Securities Transfer & Reporting Services Inc. 
    Corporate Reorganization            Corporate Reorganization                c/o Boston EquiServe L.P.   
          P.O. Box 9573                   40 Campanelli Drive                  100 William Street, Galleria 
Boston, Massachusetts 02205-8686     Braintree, Massachusetts 02184              New York, New York 10038    
                                                                                                      
</TABLE>
 
  DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM
W-9 PROVIDED BELOW.
 
  THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OR TRANSMITTAL IS COMPLETED.
 
<TABLE>  
<CAPTION> 
----------------------------------------------------------------------------------------------------------------------------
                                                DESCRIPTION OF SHARES TENDERED
----------------------------------------------------------------------------------------------------------------------------
  Name(s) and Address(es) of Registered Holder(s)
     (if space below is blank, please fill in
  exactly as name(s) appear(s) on Certificate(s))
                                                                     Share Certificate(s) and Share(s) Tendered
                                                                       (Attach additional list, if necessary)
----------------------------------------------------------------------------------------------------------------------------
                                                                            Number of Shares
                                                 Share Certificate            Evidenced by         Number of Shares
                                                    Number(s)*            Share Certificate(s)*        Tendered**
<S>                                              <C>                      <C>                      <C> 
                                                 ---------------------------------------------------------------------------
                                                 ---------------------------------------------------------------------------
                                                 ---------------------------------------------------------------------------
                                                 ---------------------------------------------------------------------------
                                                 ---------------------------------------------------------------------------
                                                 Total Shares
----------------------------------------------------------------------------------------------------------------------------
 *   Need not be completed by shareholders delivering Shares by book-entry transfer.
 **  Unless otherwise indicated, it will be assumed that all Shares represented by each Share Certificate (as defined below) 
     delivered to the Depositary are being tendered hereby. See Instruction 4.
----------------------------------------------------------------------------------------------------------------------------
</TABLE> 
<PAGE>
 
  This Letter of Transmittal is to be completed by shareholders of AG
Associates, Inc., a California corporation (the "Company"), either if (i)
certificates ("Share Certificates") evidencing Shares (as defined below) are
to be forwarded herewith or (ii) unless an Agent's Message (as defined in
Instruction 2 below) is utilized, if delivery of Shares is to be made by book-
entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined and pursuant to the book-entry transfer
procedure described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase (as defined below)). DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
 
  Shareholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares
and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in "Section 1. Terms of the Offer; Proration in
Certain Circumstances; Expiration Date" of the Offer to Purchase) and who wish
to tender their Shares must do so pursuant to the guaranteed delivery
procedure described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase. See Instruction 2.
 
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
   DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
   FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
   DELIVER SHARES BY BOOK-ENTRY TRANSFER):
 
  Name of Tendering Institution: _____________________________________________
 
  Account Number: ____________________________________________________________
 
  Transaction Code Number: ___________________________________________________
 
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
   DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
 
  Name(s) of Registered Holder(s): ___________________________________________
 
  Window Ticket Number (if any): _____________________________________________
 
  Date of Execution of Notice of Guaranteed Delivery: ________________________
 
  Name of Institution that Guaranteed Delivery: ______________________________
 
  If delivered by Book-Entry Transfer, check box: [_]
 
  Account Number _____________________________________________________________
 
  Transaction Code Number ____________________________________________________
 
                                       2
<PAGE>
 
                   NOTE: SIGNATURES MUST BE PROVIDED BELOW.
             PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
 
Ladies and Gentlemen:
 
  The undersigned hereby tenders to MIG Acquisition Corporation, a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of STEAG Electronic
Systems GmbH, a corporation organized under the laws of the Federal Republic
of Germany ("Parent"), shares of common stock, without par value (the
"Shares"), of AG Associates, Inc., a California corporation (the "Company"),
pursuant to Purchaser's offer to purchase all of the outstanding Shares, at a
purchase price of $5.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
January 22, 1999 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements thereto or hereto,
constitute the "Offer"). The undersigned understands that Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer. Parent is a wholly owned subsidiary of
STEAG Aktiengesellschaft, a corporation organized under the laws of the
Federal Republic of Germany.
 
  Subject to and effective upon acceptance for payment of the Shares tendered
herewith, in accordance with the terms of the Offer, the undersigned hereby
sells, assigns and transfers to or upon the order of Purchaser all right,
title and interest in and to all the Shares that are being tendered hereby and
all dividends, distributions (including, without limitation, distributions of
additional Shares or other securities) and rights declared, paid or
distributed in respect of such Shares on or after January 18, 1999
(collectively, "Distributions") and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of Purchaser, (ii) present such Shares and all
Distributions for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares and all Distributions, all in accordance with the terms of the Offer.
 
  The undersigned hereby irrevocably appoints designees of Purchaser, as the
attorneys and proxies of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper and otherwise act (by
written consent or otherwise) with respect to all the Shares tendered hereby
which have been accepted for payment by Purchaser prior to the time of such
vote or other action and any Shares and other securities issued in
Distributions in respect of such Shares, which the undersigned is entitled to
vote at any meeting of shareholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of
any such meeting or otherwise. This proxy and power of attorney is coupled
with an interest in the Shares tendered hereby, is irrevocable and is granted
in consideration of, and is effective upon, the acceptance for payment of such
Shares by Purchaser in accordance with other terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such
Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights of a record and beneficial owner with respect to such
Shares, including, without limitation, voting at any meeting of the Company's
shareholders then scheduled.
 
  The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all
 
                                       3
<PAGE>
 
Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will be subject
to any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Depositary or Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and
transfer or appropriate assurance thereof, Purchaser shall be entitled to all
rights and privileges as owner of each such Distribution and may withhold the
entire purchase price of the Shares tendered hereby, or deduct from such
purchase price, the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
 
  No authority herein conferred or agreed to be conferred 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. Except as stated in the Offer to Purchase, this tender is
irrevocable.
 
  The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase and in the instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Offer. Purchaser's acceptance of such Shares for payment will constitute a
binding agreement between the undersigned and Purchaser upon the terms and
subject to the conditions of the Offer, including, without limitation, the
undersigned's representation and warranty that the undersigned owns the Shares
being tendered.
 
  Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return any Share Certificates evidencing any Shares not
purchased or not tendered in the name(s) of the registered holder(s) appearing
above under "Description of Shares Tendered." Similarly, unless otherwise
indicated in the box entitled "Special Delivery Instructions," please mail the
check for the purchase price of any Shares purchased and any Share
Certificates evidencing Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing above under "Description of Shares Tendered." In the event that the
boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase
price of any Shares purchased and return any Share Certificates evidencing
Shares not purchased or not tendered in the name(s) of, and mail such check
and Share Certificates to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered hereby and delivered by book-entry transfer, but
which are not purchased, by crediting the account at the Book-Entry Transfer
Facility. The undersigned recognizes that Purchaser has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from
the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
 
                                       4
<PAGE>
 
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
   BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 8.
 
Number of Shares represented by lost, destroyed or stolen certificates: _______
 
<TABLE> 
<S>                                                        <C> 
    SPECIAL PAYMENT INSTRUCTIONS                           SPECIAL DELIVERY INSTRUCTIONS
  (See Instructions 1, 5, 6 and 7)                         (See Instructions 1, 5, 6 and 7)

   To be completed ONLY if the                                  To be completed ONLY if the
 check for the purchase price of Shares                    check for the purchase price of Shares 
 purchased or the Share Certificates                       purchased or the Share Certificates 
 evidencing Shares not tendered or not                     evidencing Shares not tendered or not 
 purchased are to be issued in the                         purchased are to be mailed to someone 
 name of someone other than the                            other than the undersigned, or to the
 undersigned, or if Shares tendered                        undersigned at an address other than 
 hereby and delivered by book-entry                        that shown under "Description of 
 transfer which are not purchased are                      Shares Tendered."
 to be returned by credit to an 
 account at the Book-Entry Transfer 
 Facility other than that designated 
 above.
 
                                                           Mail: [_] check
                                                                 [_] share certificate(s) to:
 
 Issue: [_] check
        [_] share certificate(s) to:                       Name: ____________________________________________
                                                               (Please Print: First, Middle and Last Name)
 
 Name: ____________________________________________        Address: _________________________________________
  (Please Print: First, Middle and Last Name)
 
 Address: _________________________________________        __________________________________________________
                                                                               (Zip Code)
 
 __________________________________________________        __________________________________________________
                   (Zip Code)                               Taxpayer Identification or Social Security Number
                                                             (Substitute Form W-9 must also be completed by 
 __________________________________________________                         person named above.)
 Taxpayer Identification or Social Security Number
 (Substitute Form W-9 must also be completed by 
               person named above.)
 
 [_] Credit Shares delivered by
     book-entry transfer and not
     purchased to the Book-Entry
     Transfer Facility account.
 
 Account Number: __________________________________
</TABLE> 
 
                                       5
<PAGE>
 
 
                                  IMPORTANT
 
                            SHAREHOLDERS SIGN HERE
            (Please Also Complete Substitute Form W-9 on Page 11)
 
                    ________________________________________
 
                    ________________________________________
                         Signature(s) of Shareholder(s)

 Dated:_________________, 1999
 
 (Must be signed by registered holder(s) exactly as name(s) appear(s) on
 Share Certificates or on a security position listing or by a person(s)
 authorized to become registered holder(s) by certificates and documents
 transmitted herewith. If signature is by a trustee, executor,
 administrator, guardian, attorney-in-fact, officer of a corporation or
 other person acting in a fiduciary or representative capacity, please
 provide the following information and see Instruction 5.)
 
 Name(s): ___________________________________________________________________
                                 (Please Print)
 
 Capacity (full title): _____________________________________________________
 
 Address: ___________________________________________________________________
 
 ____________________________________________________________________________
                               (Include Zip Code)
 
 Area Code and Telephone No.: _______________________________________________
 
 Taxpayer Identification or Social Security No.: ____________________________
                      (See Substitute Form W-9 on page 11)
 
                           GUARANTEE OF SIGNATURE(S)
                           (See Instructions 1 and 5)
 
                    FOR USE BY FINANCIAL INSTITUTIONS ONLY.
       FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW.
 
 Authorized Signature: ______________________________________________________
 
 Name: ______________________________________________________________________
                                 (Please Print)
 
 Title: _____________________________________________________________________
 
 Name of Firm: ______________________________________________________________
 
 Address: ___________________________________________________________________
                               (Include Zip Code)
 
 Area Code and Telephone No.: _______________________________________________
 
 Date: ______________________________________________________________________
 
 
                                       6
<PAGE>
 
                                 INSTRUCTIONS
 
             Forming Part of the Terms and Conditions of the Offer
 
  1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
or by any other bank, broker, dealer, credit union, savings association or
other entity which is an "eligible guarantor institution," as such term is
defined in Rule 17Ad-5 under the Securities Exchange Act of 1934, as amended
(each of the foregoing being referred to as an "Eligible Institution"), unless
(i) this Letter of Transmittal is signed by the registered holder(s) (which
term, for purposes of this document, shall include any participant in a Book-
Entry Transfer Facility whose name appears on a security position listing as
the owner of Shares) of the Shares tendered hereby and such holder(s) has
(have) not completed the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" herein or (ii) such Shares are
tendered for the account of an Eligible Institution. If a Share Certificate is
registered in the name of a person or persons other than the person signing
this Letter of Transmittal, or if payment is to be made or delivered to, or
certificates evidencing Shares not tendered or purchased are to be issued or
returned to, a person other than the registered holder(s), then the tendered
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear
on the Share Certificates, with the signatures on the Share Certificates or
stock powers guaranteed by an Eligible Institution as described above. See
Instruction 5.
 
  2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to
the procedure set forth in Section 3 of the Offer to Purchase. Share
Certificates evidencing all physically tendered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer, as well as a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees, or an Agent's Message (as defined in
Section 3 of the Offer to Purchase) in the case of book-entry transfer, and
any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal by the Expiration Date (as defined in Section 1 of the
Offer to Purchase). If Share Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Shareholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-
entry transfer on a timely basis may tender their Shares pursuant to the
guaranteed delivery procedure described in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase. Pursuant
to such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, must be
received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required by this Letter
of Transmittal, must be received by the Depositary within three Nasdaq
National Market ("NASDAQ") trading days after the date of execution of such
Notice of Guaranteed Delivery, all as described in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase.
 
  THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
 
                                       7
<PAGE>
 
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
 
  No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile thereof), all tendering shareholders waive any
right to receive any notice of the acceptance of their Shares for payment.
 
  3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares represented by such Share Certificates and the number of Shares
tendered should be listed on a separate schedule and attached hereto.
 
  4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares represented by any Share Certificate
delivered to the Depositary herewith are to be tendered, fill in the number of
Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such case, new Share Certificate(s) for the remainder of the
Shares that were represented by the Share Certificates delivered to the
Depositary will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions"
as soon as practicable after the expiration or termination of the Offer. All
Shares represented by Share Certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
 
  5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificates for such Shares without alteration,
enlargement or any other change whatsoever.
 
  If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
 
  If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
 
  If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate
stock powers are required, unless payment of the purchase price is to be made
to, or Share Certificates for Shares not tendered or not purchased are to be
issued in the name of or returned in the name of, any person other than the
registered holder(s), in which case the Share Certificate(s) for the Shares
tendered hereby must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Share Certificate(s). Signatures on such Share
Certificate(s) and stock powers must be guaranteed by an Eligible Institution.
 
  If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on any
such Share Certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
 
  If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority to act in
such capacity must be submitted.
 
  6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay any stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If,
 
                                       8
<PAGE>
 
however, payment of the purchase price of any Shares purchased is to be made
to, or Share Certificate(s) for Shares not tendered or not purchased are to be
returned in the name of, any person other than the registered holder(s), then
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer
to such other person will be deducted from the purchase price of such Shares
purchased, unless evidence satisfactory to Purchaser of the payment of such
taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 6, it will not be necessary for transfer tax stamps to be affixed
to the Share Certificates for the Shares tendered hereby.
 
  7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or any Share
Certificate(s) for Shares not tendered or not purchased are to be issued or
returned, in the name of a person other than the person(s) signing this Letter
of Transmittal or if such check or any such Share Certificate(s) are to be
sent to someone other than the person(s) signing this Letter of Transmittal or
to the person(s) signing this Letter of Transmittal but at an address other
than that shown in the box entitled "Description of Shares Tendered" herein,
the appropriate boxes on this Letter of Transmittal must be completed.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to the Depositary's account at
the Book-Entry Transfer Facility as such shareholder may designate in the box
entitled "Special Payment Instructions." If no such instructions are given,
any such Shares not purchased will be returned by crediting the same account
at the Book-Entry Transfer Facility designated herein as the account from
which such Shares were delivered.
 
  8. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The shareholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
 
  9. Questions and Requests for Assistance or Additional Copies. Questions and
requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
 
                           IMPORTANT TAX INFORMATION
 
  Under the Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided below, and to certify, under penalty of
perjury, that such number is correct and that such shareholder is not subject
to backup withholding of Federal income tax. If such shareholder is an
individual, the TIN is such shareholder's social security number. The holder
of Shares must also state that (i) such holder has not been notified by the
IRS that such holder is subject to backup withholding as a result of a failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified such holder that such holder is no longer subject to backup
withholding. If the Depositary is not provided with the correct TIN, the
holder of Shares may be subject to penalties imposed by the IRS and payments
made to such holder may be subject to backup withholding.
 
  Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, signed under penalties of
perjury, attesting to such individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions. A shareholder should consult his or her tax advisor as to such
shareholder's qualification for an exemption from backup withholding and the
procedure for obtaining such an exemption.
 
                                       9
<PAGE>
 
  If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax withheld pursuant to backup withholding rules will be
available as a credit against such holder's tax liabilities. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
 
                      WHAT NUMBER TO GIVE THE DEPOSITARY
 
  The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering shareholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for
the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% of all payments of the purchase price
to such shareholder until a TIN is provided to the Depositary.
 
                                      10
<PAGE>
 
                         PAYER'S NAME: BANKBOSTON, N.A.
--------------------------------------------------------------------------------
 
 
 SUBSTITUTE             Part 1--Taxpayer Identification Number--For all
 Form W-9                     accounts, enter your taxpayer identification
 Department of                number below. (For most individuals, this is
 the Treasury                 your social security number. If you do not
 Internal                     have a number, see Obtaining a Number in the
 Revenue                      enclosed Guidelines.) Certify by signing and
 Service                      dating below. Note: If the account is in more
                              than one name, see the chart in the enclosed
                              Guidelines to determine which number to give
                              the payer.
 
 Payer's Request for
 Taxpayer Identification
 Number (TIN)
                               --------------------------------------
                               Social Security Number
 
                               OR
 
                               --------------------------------------
                               Employer Identification Number
                               (If awaiting TIN write "Applied For")
 
                       --------------------------------------------------------
 
                        Part 2--For Payees Exempt From Backup Withholding,
                              see the enclosed Guidelines and complete as
                              instructed therein.
 
--------------------------------------------------------------------------------
 
 Certifications--Under penalties of perjury, I certify that:
 
  (1)  The number 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 I have not been
       notified by the Internal Revenue Service (the "IRS") that I am
       subject to backup withholding as a result of failure to report all
       interest or dividends, or the IRS has notified me that I am no longer
       subject to backup withholding.
 
 Certificate Instructions--You must cross out item (2) above if you have been
 notified by the IRS that you are subject to backup withholding because of
 underreporting interest or dividends on your tax return. However, if after
 being notified by the IRS that you were subject to backup withholding, you
 received another notification from the IRS that you are no longer subject to
 backup withholding, do not cross out item (2). (Also see instructions in the
 enclosed Guidelines.)
 
--------------------------------------------------------------------------------
 SIGNATURE _____________________________________ DATE ____________________, 1999
--------------------------------------------------------------------------------
 
NOTE:  FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
       BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
       OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
       CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
       FOR ADDITIONAL DETAILS.
 
       YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU ARE AWAITING
           (OR WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
 
--------------------------------------------------------------------------------
            CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
 
   I certify under penalty of perjury that a taxpayer identification number
 has not been issued to me, and either (i) I have mailed or delivered an
 application to receive a taxpayer identification number to the appropriate
 Internal Revenue Service Center or Social Security Administration Office, or
 (ii) I intend to mail or deliver an application in the near future. I
 understand that because I have not provided a taxpayer identification
 number, 31% of all reportable payments made to me pursuant to the Offer may
 be withheld until I provide a number.
 
 _______________________________________________         _____________________
                    Signature                                    Date
--------------------------------------------------------------------------------
 
                                       11
<PAGE>
 
  Facsimiles of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal, certificates evidencing Shares
and any other required documents should be sent or delivered by each
shareholder or such shareholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
 
                       The Depositary for the Offer is:
 
                               BANKBOSTON, N.A.
 
<TABLE>
<S>                                     <C>
            By First Class Mail:        By Overnight, Certified or Express Mail Delivery:
              BankBoston, N.A.                          BankBoston, N.A.
          Corporate Reorganization                  Corporate Reorganization
                P.O. Box 9573                          40 Campanelli Drive
      Boston, Massachusetts 02205-8686           Braintree, Massachusetts 02184
</TABLE>
 
                                   By Hand:
 
                 Securities Transfer & Reporting Services Inc.
                           c/o Boston EquiServe L.P.
                         100 William Street, Galleria
                           New York, New York 10038
 
<TABLE>
<S>                                              <C>
    By Facsimile for Eligible Institutions Only: Confirmation of Facsimile by Telephone:
 (781) 794-6352                                              (781) 794-6380
</TABLE>
 
  Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
the Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A shareholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
 
                    The Information Agent for the Offer is:
 
                    CORPORATE INVESTOR COMMUNICATIONS, INC.
                               111 Commerce Road
                       Carlstadt, New Jersey 07072-2586
 
                     Banks and Brokers call (800) 346-7885
                   All others call toll free (888) 206-3388
 
1404-LT-99
