<PAGE>   1

                                                                     EXHIBIT 4.1


                              LETTER OF TRANSMITTAL
                               WITH RESPECT TO THE
               CONVERSION AND EXCHANGE OF PROMISSORY NOTES MADE BY
                           ISOLAGEN TECHNOLOGIES, INC.
                           FOR SHARES OF COMMON STOCK
                                       OF
                        AMERICAN FINANCIAL HOLDING, INC.


Mail or deliver this Letter of Transmittal, or a facsimile hereof, together with
your promissory note(s) to Benchmark Equity Group ("Benchmark"), 700 Gemini,
Houston, Texas 77058, Attention: Jeffrey W. Tomz. Following the Effective Time
of the Merger, Benchmark will deliver this Letter of Transmittal and your
note(s) to Fidelity Transfer Company, the Exchange Agent. If the Merger is not
consummated, Benchmark will return your note(s) and cancel this Letter of
Transmittal. For information, contact Benchmark at 281-488-3883. For information
regarding your certificates for Company Common Stock after the Effective Time of
the Merger, contact Fidelity Transfer Company at 1-800-484-7222.


                   DESCRIPTION OF PROMISSORY NOTES SURRENDERED

<Table>
<Caption>
                                (1)                                                        (2)
            NAME AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR ON THE PROMISSORY NOTE(S))     PRINCIPAL AMOUNT OF PROMISSORY NOTE(S)
--------------------------------------------------------------------     --------------------------------------
<S>                                                                      <C>

</Table>

         Please issue one certificate to the undersigned shown above (unless a
different name is indicated in the Special Issuance Instructions box below)
representing the conversion and exchange of the promissory note(s) made by
Isolagen Technologies, Inc. in favor of the undersigned shown above, for
delivery by mail to the address shown above (unless a different address is
indicated in the Special Delivery Instructions box or the Special Issuance
Instructions box below).




<PAGE>   2


Ladies and Gentlemen:

         In connection with the merger (the "Merger") of ISO Acquisition Corp.,
a Delaware corporation ("Merger Sub"), and Gemini IX Inc., a Delaware
corporation ("Gemini"), with and into Isolagen Technologies, Inc., a Delaware
corporation ("Isolagen"), and pursuant to the Agreement and Plan of Merger,
dated July ___, 2001, by and among American Financial Holding, Inc., a Delaware
corporation and parent company of Merger Sub (the "Company"), Merger Sub,
Gemini, Isolagen and certain stockholders of Isolagen (the "Merger Agreement"),
the undersigned hereby surrenders the promissory note(s) made by Isolagen in
favor of the undersigned in the original principal amount(s) described above
(the "Note(s)"), in exchange for shares of common stock, par value $0.01 per
share, of Isolagen ("Isolagen Common Stock"). The undersigned understands that
the Merger has been approved by the Boards of Directors and stockholders of
Merger Sub, Gemini and Isolagen and the Board of Directors of the Company and
agrees, in accordance with the terms and conditions of the Merger Agreement, to
accept 1.2068975 shares of common stock, par value $0.001 per share, of the
Company ("Company Common Stock") for each $1.00 of principal of the Note(s)
described above in lieu of shares of Isolagen Common Stock. The shares of the
Company Common Stock received by the undersigned as a result of the exchange of
the Note(s) are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering, and under such laws and applicable
regulations such shares may be resold without registration under the Securities
Act of 1933, as amended (the "Securities Act"), only in certain limited
circumstances. Undefined capitalized terms herein are defined in the Merger
Agreement.

         All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
estates, successors and assigns of the undersigned. The undersigned hereby
represents and warrants that the undersigned is the holder of the Note(s)
delivered hereby and has full power and authority to submit and exchange the
Note(s) delivered for exchange hereby. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange of the Notes
tendered for exchange hereby.

         The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent the true and lawful attorney-in-fact of the undersigned with
respect to the Note(s) with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to cancel the
Note(s) and deliver such Note(s) to Isolagen and to deliver to the undersigned
the shares of Company Common Stock to which the undersigned is entitled upon the
surrender of the Note(s).

         The undersigned understands and agrees that the method of delivery of
the Note(s) and this Letter of Transmittal is at the election and risk of the
holder of the Note(s). If delivery of the Note(s) is by mail, registered mail
with return receipt requested, properly insured, is recommended.

         The undersigned hereby acknowledges that the undersigned has read the
Instructions accompanying this Letter of Transmittal.



<PAGE>   3
--------------------------------------------------------------------------------
                          SPECIAL ISSUANCE INSTRUCTIONS
                          (See Instructions 2, 4 and 6)


(To be completed only if the certificates for shares of Company Common are to be
issued in the name of someone other than the undersigned.)

Issue and mail shares of Company Common Stock to:


Name:
     --------------------------------------------------------------------------
                                (Please Print)


Address:
        -----------------------------------------------------------------------



-------------------------------------------------------------------------------
(City)                            (State)                             (ZIP)


                         (COMPLETE SUBSTITUTE FORM W-9)

                   (Tax Identification or Social Security No.)
--------------------------------------------------------------------------------

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


                          SPECIAL DELIVERY INSTRUCTIONS
                          (See Instructions 2, 4 and 6)


(To be completed only if the certificates for shares of Company Common Stock
are to be mailed to the undersigned at an address other than that shown in the
box on the cover sheet.)

Mail shares of Company Common Stock to:



Name:
     --------------------------------------------------------------------------
                                (Please Print)


Address:
        -----------------------------------------------------------------------



-------------------------------------------------------------------------------
(City)                            (State)                             (ZIP)
-------------------------------------------------------------------------------





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


BY EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED HEREBY DELIVERS TO THE
COMPANY FOR EXCHANGE THE NOTE(S) INDICATED IN THE BOX ENTITLED "DESCRIPTION OF
PROMISSORY NOTE(S) SURRENDERED."

                                   SIGN HERE:
                               (See Instruction 4)
                         (Complete Substitute Form W-9)



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



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


--------------------------------------------------------------------------------
                           (Signature(s) of Holder(s))

Dated:                                                      , 2001
      -----------------------------------------------------

Name:
     ---------------------------------------------------------------------------
                                (Please Print)



--------------------------------------------------------------------------------
            (Title of signer if acting in a representative capacity)


Address:
        ------------------------------------------------------------------------


--------------------------------------------------------------------------------
(City)                             (State)                            (ZIP)


Telephone Number
                ----------------------------------------------------------------

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

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



                           SIGNATURE(S) GUARANTEED BY:

                      (To be completed only if required by
                              Instructions 2 and 4)

The undersigned hereby guarantees the signature(s) which appear(s) on this
Letter of Transmittal and the Note(s) surrendered pursuant to this Letter of
Transmittal.



--------------------------------------------------------------------------------
                    (Name of Institution Issuing Guarantee)


By:
   -----------------------------------------------------------------------------
                            (Authorized Signature)


Title:
      --------------------------------------------------------------------------


Address of Guaranteeing Firm:
                             ---------------------------------------------------


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


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


Dated:                                                     , 2001
      -----------------------------------------------------


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

<PAGE>   4


                                  INSTRUCTIONS

     FORMING PART OF THE TERMS AND CONDITIONS OF THIS LETTER OF TRANSMITTAL

         1. Use of Letter of Transmittal. This Letter of Transmittal, properly
completed and duly executed, together with the surrendered Note(s) and any
documents required by this Letter of Transmittal, should be sent by mail or
overnight courier or delivered by hand to Benchmark for transmittal to the
Exchange Agent at the Effective Time of the Merger in order to make an effective
surrender. Until all necessary steps have been taken to surrender the Note(s),
no exchange shall be made. The method of delivery of all documents is at the
option and risk of the undersigned and the delivery will be deemed made only
when actually received. If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. A return envelope is
enclosed for your convenience.

         2. Guarantee of Signatures. If this Letter of Transmittal is signed by
the registered holder(s) of the Note(s) tendered therewith and such holder(s)
have not completed the "Special Issuance Instructions" or "Special Delivery
Instructions" above, signatures on this Letter of Transmittal are not required
to be guaranteed. In all other cases, signatures on this Letter of Transmittal
must be guaranteed in accordance with Rule 17Ad-15 (promulgated under the
Securities Exchange Act of 1934) by an eligible guarantor institution which is a
participant in a stock transfer association recognized program, such as a firm
that is a member of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., by a commercial bank or trust
company having an office or correspondent in the United States or by an
international bank, securities dealer, securities broker or other financial
institution licensed to do business in its home country (an "Eligible
Institution").

         3. Signatures on this Letter of Transmittal, Powers of Attorney and
Endorsements.

         (a)      If this Letter of Transmittal is signed by the registered
                  holder(s) of the Note(s) delivered herewith, the signature(s)
                  of the holder on this Letter of Transmittal must correspond
                  exactly with the name(s) as written on the face of the Note(s)
                  without alteration, or any change whatsoever.

         (b)      If any Note(s) are held or owned of record by two or more
                  joint owners, all such owners must sign this Letter of
                  Transmittal.

         (c)      Do not endorse the Note(s) if the Company Common Stock
                  certificate is to be issued in the name of the registered
                  holder(s) unless the registered holder(s) is/are completing
                  the Special Issuance Instructions.

         (d)      If the certificates of the Company Common Stock are to be
                  issued in the name of a person other than the signer of a
                  Letter of Transmittal, then the Note(s) surrendered in
                  exchange therefor must be endorsed or accompanied by an
                  appropriate instrument of transfer signed exactly as the name
                  of the registered owner appears on such Note(s), with the
                  signatures on the endorsement or instrument of transfer
                  guaranteed by an Eligible Institution (unless signed by an
                  Eligible Institution).

         (e)      If this Letter of Transmittal or any proxy is signed by a
                  trustee, executor, administrator, guardian, attorney-in-fact,
                  officer of a corporation or other person acting in a fiduciary
                  or


<PAGE>   5


                  representative capacity, such person must so indicate when
                  signing, and proper evidence satisfactory to the Company of
                  their authority to so act must be submitted.

         (f)      If this Letter of Transmittal is signed by a person other than
                  the registered holder(s) of the Note(s) listed, the Note(s)
                  must be endorsed or accompanied by an appropriate instrument
                  of transfer, in either case signed exactly as the name(s) of
                  the registered holder(s) appear(s) on the Note(s). Signatures
                  on such Note(s) or instrument of transfer must be guaranteed
                  by an Eligible Institution (unless signed by an Eligible
                  Institution).

         4. Special Issuance and Special Delivery Instructions. If the Company
Common Stock is to be issued and paid to someone other than the holder or mailed
to an address other than that shown above, the appropriate boxes on this Letter
of Transmittal should be completed.

         5. Irregularities. All questions as to the form of documents and the
validity of the Note(s) will be resolved by the Company, in its sole discretion,
whose determination shall be final and binding. The Company reserves the
absolute right to reject any deliveries of any Note(s) for exchange that are not
in proper form, or the acceptance of which would, in the opinion of the Company
or its counsel, be unlawful. The Company reserves the absolute right to waive
any defect or irregularity of delivery for exchange with regard to any Note(s).

         6. Mutilated, Lost, Stolen or Destroyed Note(s). Any holder whose
Note(s) have been mutilated, lost, stolen or destroyed should complete this
Letter of Transmittal and the attached Affidavit and Indemnity indicating that
his/her Note(s) has/have been mutilated, lost, stolen or destroyed.

         7. Requests for Assistance or Additional Copies. Requests for
assistance or for additional copies of this Letter of Transmittal may be
directed to Benchmark at the address or telephone number set forth on the cover
of this Letter of Transmittal.

         8. Representations and Warranties. The holder of the Note(s) represent
and warrant to the Company that, to the best of their knowledge, each of the
following are true and correct:

         (d)      Purchase Entirely for Own Account. The shares of Company
                  Common Stock to be acquired by the holder of the Note(s) as
                  part of the Merger Consideration will be acquired for
                  investment for the holder's own respective accounts, not as a
                  nominee or agent, and not with a view to the resale or
                  distribution of any part thereof, and that the holder has no
                  present intention of selling, granting any participation in or
                  otherwise distributing the same. By executing this Letter of
                  Transmittal, the holder of the Note(s) further represent that
                  the holder does not have any contract, undertaking, agreement
                  or arrangement with any person to sell, transfer or grant
                  participations to such person or to any third person, with
                  respect to any of the shares of Company Common Stock to be
                  acquired by him/her as part of the Merger Consideration.

         (b)      Disclosure of Information. The holder of the Note(s) believes
                  he/she has received all the information he/she consider
                  necessary or appropriate for deciding whether participate in
                  the exchange of the Note(s) as described in the Merger
                  Agreement and this Letter of Transmittal. The holder of the
                  Note(s) further represent that he/she has had an opportunity
                  to ask questions and receive answers from the Company
                  regarding the terms and conditions of the exchange of the
                  Note(s) and the business, properties, prospects and financial
                  condition of the Company.



<PAGE>   6



         (c)      Investment Experience. The holder of the Note(s) is an
                  investor in securities of companies in the development stage
                  and each acknowledges that he/she is able to bear the economic
                  risk of this investment, and has such knowledge and experience
                  in financial or business matters that it is capable of
                  evaluating the merits and risks of the investment in the
                  Company Common Stock.

         (d)      Accredited Investor. The holder of the Note(s) is an
                  "accredited investor" within the meaning of Securities and
                  Exchange Commission Rule 501 of Regulation D, as presently in
                  effect.

         (e)      Restricted Securities. The holder of the Note(s) understands
                  that the shares of the Company Common Stock that he/she will
                  received as a result of Merger are characterized as
                  "restricted securities" under the federal securities laws
                  inasmuch as they are being acquired from the Company in a
                  transaction not involving a public offering and that under
                  such laws and applicable regulations such shares may be resold
                  without registration under the Securities Act only in certain
                  limited circumstances. In the absence of an effective
                  registration statement covering the shares of Company Common
                  Stock or an available exemption from registration under the
                  Securities Act, the shares must be held indefinitely. The
                  holder of the Note(s) represents that he/she is familiar with
                  Securities and Exchange Act Rule 144, as presently in effect,
                  and understands the resale limitations imposed thereby and by
                  the Securities Act of 1953, as amended, including without
                  limitation the Rule 144 condition that current information
                  about the Company be available to the public.

         (f)      Tax Advisors. The holder of the Note(s) has reviewed with
                  his/her own tax advisors the federal, state and local tax
                  consequences of the Merger, where applicable, and the exchange
                  of the Note(s) as described in the Merger Agreement and this
                  Letter of Transmittal. The holder of the Note(s) is relying
                  solely on such advisors and not on any statements or
                  representations of the Company, Isolagen or any of their
                  agents and understands that the holder of the Note(s) (and not
                  the Company or Isolagen) shall be responsible for the holder's
                  own respective tax liabilities that may arise as a result of
                  the Merger or the exchange of the Note(s).

         (g)      Legal Counsel. The holder of the Note(s) acknowledges that
                  he/she has had the opportunity to review the Merger Agreement,
                  the exhibits and the schedules attached thereto, and the
                  transactions contemplated therein with his/her own legal
                  counsel.

                            IMPORTANT TAX INFORMATION

         A holder who delivers Note(s) for exchange is required to provide the
Company (as payer), through the Exchange Agent, with the holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 or otherwise
establish a basis for exemption from backup withholding. Generally, if the
holder is an individual, the TIN is the holder's social security number. If the
Exchange Agent is not provided with the correct taxpayer identification number,
the holder may be subject to a $50 penalty, as well as various other penalties,
imposed by the Internal Revenue Service. In addition, payments made to the
holder with respect to the Company Common Stock may be subject to backup
withholding.

         Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt holders should indicate their exempt status on Substitute
Form W-9. A foreign individual may qualify as an exempt recipient or other


<PAGE>   7


payee by submitting to the Exchange Agent a properly completed Internal Revenue
Service Form W-8 signed under penalty of perjury, attesting to the holder's
exempt status.

         If backup withholding applies, the Company is required to withhold 31%
of any payment made to the holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the amount withheld will be credited
against the federal income tax liability of persons subject to backup
withholding. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service provided that the required
information is timely furnished to the Internal Revenue Service.

PURPOSE OF SUBSTITUTE FORM W-9

         To prevent backup withholding on payments that are made to a holder
with respect to the Company Common Stock, the holder is required to provide the
Exchange Agent with either: (i) the holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that the holder is awaiting a TIN) and that (A) the holder has not been notified
by the Internal Revenue Service that he or she is subject to backup withholding
as a result of failure to report all interest or dividends or (B) the Internal
Revenue Service has notified the holder that he or she is no longer subject to
backup withholding; or (ii) an adequate basis for exemption.

WHAT NUMBER TO GIVE THE EXCHANGE AGENT

         The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
Note(s).





<PAGE>   8



                     TO BE COMPLETED BY ALL HOLDERS OF NOTES
           (See Instruction 5 and "Important Tax Information" on this
                             Letter of Transmittal)


<Table>
<S>                                  <C>                               <C>

----------------------------------------------------------------------------------------------------------
                             PAYER'S NAME: AMERICAN FINANCIAL HOLDING, INC.
----------------------------------------------------------------------------------------------------------
        SUBSTITUTE                    Part 1--PLEASE PROVIDE YOUR           Social Security Number
         FORM W-9                     TIN IN THE BOX AT RIGHT AND
Department of the Treasury            CERTIFY BY SIGNING AND                  ------------------
 Internal Revenue Service             DATING BELOW.                                 ------

                                                                                      OR


                                                                        Employer Identification Number

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




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

  Payer's Request for Taxpayer        Name (Please Print)
                                                         -------------------------------------------------
Identification Number (TIN) and
                                      Address
                                             -------------------------------------------------------------
         Certificate

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


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


                                      --------------------------------------------------------------------
                                      City                        State                        ZIP Code

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

                                      Part 2--Awaiting TIN  [ ]
</Table>

--------------------------------------------------------------------------------
PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the
number shown on this form is my correct taxpayer identification number (or a TIN
has not been issued to me but I have mailed or delivered an application to
receive a TIN or intend to do so in the near future), (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 a failure to report all interest or dividends or the IRS has notified me that
I am no longer subject to backup withholding, and (3) all other information
provided on this form is true, correct and complete.


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-reported interest
or dividends on your tax return and you have not been advised by the IRS that
such backup withholding has been terminated.

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

FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING.

               YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
                CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9



<PAGE>   9
--------------------------------------------------------------------------------

             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under the penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) 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 (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.


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

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








<PAGE>   10


                        AFFIDAVIT OF FACTS AND AGREEMENT
                             CONCERNING LOSS OF NOTE

State of                            )
        -------------------------   )
                                    )
County of                           )
         ------------------------   )


         The undersigned (hereinafter called "Affiant"), being duly sworn on
oath, deposes and says that each of the following is true and correct to
Affiant's personal knowledge:

         I am the owner and holder (the "Beneficial Owner") of the Promissory
Note dated ______________ (the "Original Instrument"), in the original principal
amount of $_______ issued by Isolagen Technologies, Inc. (the "Issuer"), payable
to Affiant.

         The Original Instrument has been lost, mislaid, stolen or destroyed and
cannot now be produced. Affiant has made, or caused to be made, a diligent
search for said Original Instrument and has been unable to find or recover it.
Neither the Original Instrument nor any interest therein, has been sold,
assigned, endorsed, transferred, deposited under any agreement, hypothecated,
pawned, pledged for any loan or disposed of in any manner by the Beneficial
Owner; and, to the best knowledge of the undersigned, neither the Beneficial
Owner nor anyone on the Beneficial Owner's behalf has signed any power of
attorney, stock power or other assignment or authorization respecting the
Original Instrument which is now outstanding and in force; and no other person,
firm or corporation has any right, title, claim, equity or interest in, to or
respecting the Original Instrument.

         This Affidavit is made to induce the Issuer and American Financial
Holding, Inc., and any transfer agent or other agent in any capacity, to issue
and/or deliver new or substitute instruments or certificates in lieu of and in
exchange for the Original Instrument described above, which was lost or
destroyed or otherwise cannot be located, without requiring surrender of the
Original Instrument.

         If said new or substitute certificates are issued, countersigned or
registered, or such payments, deliveries, exchanges or credits are made in
respect of the Original Instrument, or if both such actions are taken, it is
understood that Affiant does hereby agree that if the Original Instrument comes
into Affiant's hands, custody or control, Affiant will deliver, or cause the
Original Instrument to be delivered, to the Issuer, or its successors or any
transfer agent, in order that the same be cancelled. Affiant further agrees to
indemnify, defend and hold harmless the Issuer against the presentation of the
Original Instruments by any person or entity and against any amount payable in
respect thereof for which the Issuer may be held liable, together with costs and
attorneys' fees.

                          [SIGNATURE ON FOLLOWING PAGE]




<PAGE>   11


         IN WITNESS WHEREOF, Affiant hereunto subscribes his name this ___ day
of July, 2001.

                                    AFFIANT:

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

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



State of                            )
        -------------------------   )
                                    )
County of                           )
         ------------------------   )


         Sworn to and subscribed before me by __________________________ on the
_________ day of July, 2001.


                                             --------------------------------
      [SEAL]                                         Notary Public

                                             My Commission Expires:
                                                                   ----------