EXHIBIT 10.4
                                                                    ------------

                              DIRECTOR STOCK OPTION

                                   GRANTED BY

                                  DYNAGEN, INC.

                       (hereinafter called the "Company")

                                       TO

                                 HARRY SILVERMAN

                        (hereinafter called the "Holder")


           For valuable consideration, the receipt of which is hereby
acknowledged, the Company hereby grants to the Holder the following option:

           FIRST: Subject to the terms and conditions hereinafter set forth, the
Holder is hereby given the right and option to purchase from the Company shares
of the common stock, $.01 par value per share, ("Common Stock"), of the Company.
Schedule A hereto, the provisions of which are incorporated by reference herein,
sets forth (a) the maximum number of shares that the Holder may purchase upon
exercise of this Option, (b) the exercise price per share of Common Stock
purchasable hereunder, (c) the expiration date of this Option, (d) the vesting
rate, if any and (e) certain other terms and conditions applicable to this
Option.

           This Option shall be exercised in whole or in part by the Holder's
delivery to the Company of written notice (the "Notice of Exercise") setting
forth the number of shares with respect to which this Option is to be exercised,
together with (a) cash in an amount, or a check, bank draft or postal or express
money order payable in an amount, equal to the aggregate exercise price for the
shares being purchased, (b) with the consent of the Board (which term shall
herein include the compensation committee of the Board), shares of Common Stock
having a fair market value equal to such aggregate exercise price; (c) with the
consent of the Board, a personal recourse note issued by the Holder to the
Company in a principal amount equal to such aggregate exercise price and with
such other terms, including interest rate and maturity, as the Board may
determine in its discretion, PROVIDED that the interest rate borne by such note
shall not be less than the lowest applicable federal rate, as defined in Section
1274(d) of the Internal Revenue Code of 1986, as amended; (d) with the consent
of the Board, such other consideration that is acceptable to the Board and that
has a fair market value, as determined by the Board, equal to such aggregate
exercise price; or (e) with the consent of the Board, any combination of the
foregoing. The "fair market value" of the Common Stock shall equal (i) the
closing price per

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share on the date of grant of the Option as reported by the National Market
System or another automated quotation system of the National Association of
Securities Dealers, Inc., including the OTC Bulletin Board, (ii) if the Common
Stock is not quoted on any such system, as reported by a national stock exchange
or (iii) if the Common Stock is not listed on such an exchange, the fair market
value as determined by the Board.

           SECOND: The Company, in its discretion, may file a registration
statement on Form S-8 under the Securities Act of 1933, as amended, to register
shares of Common Stock reserved for issuance under this option. At any time at
which such a registration statement is not in effect, it shall be a condition
precedent to any exercise of this Option that the Holder shall deliver to the
Company a customary "investment letter" satisfactory to the Company and its
counsel in which, among other things, the Holder shall (a) state that he or she
is acquiring shares of Common Stock subject to the Option for his or her own
account for investment and not with a view to the resale or distribution thereof
and (b) acknowledge that those shares are not freely transferable except in
compliance with federal and state securities laws.

           THIRD: In order to exercise this option in whole or in part, the
Holder shall deliver to the Company the Notice of Exercise and related
investment letter, payment of exercise price pursuant to Paragraphs First and
Second hereof and any agreement not inconsistent with that may then be required
by the Company in its sole discretion. As promptly as practicable after receipt
by the Company, such materials, the Company shall deliver to the Holder (or if
any other individual or individuals are exercising this Option, to such
individual or individuals) a certificate registered in the name of the Holder
(or the names of the other individual or individuals exercising this Option) and
representing the number of shares with respect to which this Option is then
being exercised; PROVIDED, HOWEVER, that if any law or regulation or order of
the Securities and Exchange Commission or any other body having jurisdiction in
the premises shall require the Company or the Holder (or the individual or
individuals exercising this Option) to take any action in connection with the
shares then being purchased, the date for the delivery of the certificate for
such shares shall be extended for the period necessary to take and complete such
action. The Company may imprint upon said certificate such legends as counsel
for the Company may consider appropriate. Delivery by the Company of the
certificates for such shares shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to the Holder, at the address
specified in the Notice. The Company will pay all fees or expenses necessarily
incurred by the Company in connection with the issuance and delivery of shares
pursuant to the exercise of this Option.

           The Company will, at all times while any portion of this Option is
outstanding, reserve and keep available, out of shares of its authorized and
unissued Common Stock or shares of Common Stock held in treasury, a sufficient
number of shares of its Common Stock to satisfy the requirements of this Option.

           FOURTH: If the Company shall effect any subdivision or consolidation
of shares of its stock or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares outstanding, in
any such case without receiving compensation therefor in money, services or
property, then the number, class and per share price of shares of

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stock subject to this Option shall be appropriately adjusted in such a manner as
to entitle the Holder to receive upon exercise of this Option, for the same
aggregate cash consideration, the same total number and class of shares as he or
she would have received as a result of the event requiring the adjustment had he
or she exercised this Option in full immediately prior to such event.

           If the Company shall be a party to a reorganization or merger with
one or more other corporations (whether or not the Company is the surviving or
resulting corporation), shall consolidate with or into one or more other
corporations, shall be liquidated, or shall sell or otherwise dispose of
substantially all of its assets to another corporation (each a "Transaction"),
then:

                     (a) subject to the provisions of clauses (b) and (c) below,
           after the effective date of the Transaction, the Holder of this
           Option shall be entitled, upon exercise hereof and at no additional
           cost, to receive shares of Common Stock or, if applicable, shares of
           such other stock or other securities, cash or property as the holders
           of shares of Common Stock received pursuant to the terms of the
           Transaction;

                     (b) the Board may accelerate the time for exercise of this
           Option to a date prior to the effective date of the Transaction, as
           specified by the Board; or

                     (c) this Option may be canceled by the Board as of the
           effective date of the Transaction, PROVIDED that (i) notice of such
           cancellation shall have been given to the Holder and (ii) the Holder
           shall have the right to exercise this Option to the extent the same
           is then exercisable or, if the Board shall have accelerated the time
           for exercise of this Option, in full during the thirty-day period
           preceding the effective date of the Transaction.

           Except as hereinbefore expressly provided, the issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to this Option.

           FIFTH: Neither the Holder nor any other person shall, by virtue of
the granting of this Option, be deemed for any purpose to be the owner of any
shares of Common Stock subject to this Option or to be entitled to the rights or
privileges of a holder of such shares unless and until this Option has been
exercised pursuant to the terms hereof with respect to such shares and the
Company has issued and delivered the shares to the Holder.

           SIXTH: This Option is not transferable by the Holder or by operation
of law, otherwise than by will or under the laws of descent and distribution.
This Option is exercisable, during the Holder's lifetime, only by the Holder.

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           In the event that the Holder's employment (which term shall
"employment" include service as a director with the Company or any subsidiary is
terminated by the Holder or by the Company without "Cause" (as defined
hereinafter) other than in connection with the Holder's death or permanent and
total disability, the Holder shall nonetheless have the right to exercise this
Option after the date on which the Holder so ceases to be an employee of the
Company or any subsidiary or parent (but not later than the expiration date of
this Option) with respect to the shares which were purchasable by the Holder by
exercise of this Option on such date.

           In the event that the Holder's employment is terminated by the
Company for Cause, this Option shall terminate immediately. As used in this
Option, "Cause" shall mean a determination by the Company (including the Board)
or a subsidiary or parent that the Holder's employment with the Company or such
subsidiary or parent should be terminated as a result of (i) a material breach
by the Holder of any agreement to which the Holder and the Company (or such
subsidiary or parent) are both parties, (ii) any act (other than resignation or
retirement) by the Holder that may have a material and adverse effect on the
business of the Company or any subsidiary or on the ability to perform services
for the Company or such subsidiary, including the proven or admitted commission
of any crime (other than an ordinary traffic violation), or (iii) any material
misconduct or material neglect of duties by the Holder in connection with the
business or affairs of the Company or such subsidiary or parent.

           In the event of the death or permanent and total disability of the
Holder prior to the date of termination or expiration of this Option, this
Option shall terminate on the earlier of the expiration date of this Option or
one year following the date of such death or disability. In the event of the
death of the Holder prior to the date of termination or expiration of this
Option, the Holder's executors, administrators or any individual or individuals
to whom this Option is transferred by will or under the laws of descent and
distribution, as the case may be, shall have the right to exercise this Option
(but not later than the expiration date of this Option) with respect to the
number of shares purchasable by the Holder at the date of death.

           SEVENTH: The Holder agrees that, during the 180-day period commencing
with the closing date of any public offering by the Company of shares of Common
Stock pursuant to a registration statement filed under the Securities Act of
1933, as amended, or any successor act, the Holder will not, without the prior
written consent of the representative or representatives of the underwriters of
such offering, directly or indirectly, sell, offer to sell, contract to sell,
grant any option for the sale of, assign, transfer, pledge, hypothecate or
otherwise dispose of or encumber any shares of Common Stock acquired upon
exercise of this Option, other than such shares, if any, as shall be covered by
such registration statement or as shall be consented to by the Company and such
representative or representatives. The Holder further agrees that, in order to
facilitate any such public offering, (a) the agreements in this Paragraph
Seventh shall be for the benefit of such underwriters as well as the Company and
(b) upon request of such representative or representatives, the Holder will
execute a separate written instrument to the effect set forth in the preceding
sentence, with such changes therein as such representative or representatives
may request, PROVIDED that such changes are not materially adverse to the
interest of the Holder.

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           EIGHTH: If the Company in its discretion determines that it is
obligated to withhold tax with respect to shares of Common Stock received on
exercise of this Option, the Holder agrees that the Company may withhold from
the Holder's wages the appropriate amount of federal, state or local withholding
taxes attributable to the Holder's exercise of such Option. At the Company's
discretion, the amount required to be withheld may be withheld in cash from such
wages or (with respect to compensation income attributable to the exercise of
this Option) in kind from the Common Stock otherwise deliverable to the Holder
on exercise of this Option. The Holder further agrees that, if the Company does
not withhold an amount from the Holder's wages sufficient to satisfy the
Company's withholding obligation, the Holder will remit to the Company on
demand, in cash, the amount estimated by the Company to be underwithheld.

           NINTH: Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company and delivered at the office of the
Chief Financial Officer of the Company, or to such other officer or at such
other address as the Company may hereafter designate, or when deposited in the
mail, postage prepaid, addressed to the attention of the Chief Financial Officer
of the Company at such office or other address.

           Any notice to be given to the Holder hereunder shall be deemed
sufficient if addressed to and delivered in person to the Holder at the address,
or by facsimile to the number, furnished to the Company or when deposited in the
mail, postage prepaid, addressed to the Holder at such address.

           TENTH: This Option is subject to all laws, regulations and orders of
any governmental authority which may be applicable thereto and, notwithstanding
any of the provisions hereof, the Holder agrees that he will not exercise the
Option granted hereby nor will the Company be obligated to issue any shares of
stock hereunder if the exercise thereof or the issuance of such shares, as the
case may be, would constitute a violation by the Holder or the Company of any
such law, regulation or order or any provision thereof.

                                      * * *

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           IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in its name and on its behalf as of the effective date.


                                         DYNAGEN, INC.


                                         By: /s/ Dhananjay G. Wadekar
                                            ---------------------------------
                                         Name: Dhananjay G. Wadekar
                                         Title: Executive Vice President




Acknowledgment

           The undersigned Holder acknowledges receipt of this Stock Option
Agreement, including Schedule A hereto, and agrees to be bound by all
obligations of the Holder as set forth in such Stock Option Agreement.

                                         HOLDER
                                         /s/ Harry Silverman
                                         -----------------------------------
                                         Name:


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                                   SCHEDULE A

                                  DYNAGEN, INC.

                              DIRECTOR STOCK OPTION


Date of Grant:                                February 24, 2001

Name of Holder:                               Harry Silverman

Address:                                      1833 Wintergreen Court
                                              Ann Arbour, MI 48103


Social Security Number:                       ###-##-####

Maximum number of shares for which
this Option is exercisable:                   500,000 shares

Exercise (purchase) price per share:          $.22

Expiration date of this Option:               February 24, 2008

Vesting rate:                                 Each such option is to become
                                              excisable in four equal
                                              installments at the end of each
                                              calendar quarter during the year
                                              2001; 125,000 will vest on
                                              03/31/01, 125,000 on 06/30/01,
                                              125,000 on 09/30/01 and 125,000 on
                                              12/31/01.

Other terms and conditions:                   None.

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