<PAGE>
 
                                                                   EXHIBIT 10.31

                                                            NOVEMBER 13, 1998
                                                            -----------------


                  CERTIFICATE AND AGREEMENT OF PARTICIPATION

                              SILVER DINER, INC.

                     RESTAURANT OPERATING PARTNER PROGRAM
                                        
     This Certificate and Agreement of Participation ("Certificate of
Participation") is entered into as of this ____ day of __________, 199__, by and
between Silver Diner, Inc., a Delaware corporation ("SDI") and its wholly-owned
subsidiary Silver Diner Development, Inc., a Virginia corporation (both
corporations being collectively referred to herein, unless the context otherwise
requires, as "Silver Diner") and _______________ ("Operating Partner").

     1.   OPERATING PARTNER; DUTIES AND PERFORMANCE; EFFECTIVE DATE.

     Silver Diner hereby retains the Operating Partner to serve as the general
manager for the Silver Diner Restaurant located at _________________ (the
"Restaurant") on the terms and conditions set forth herein.

          (A) DUTIES.  The Operating Partner's duties shall include (i) managing
the day-to-day business, operations and affairs of the Restaurant; (ii) assuming
responsibility for efficiently and effectively operating the Restaurant so as to
achieve high levels of customer satisfaction, (iii) assuming responsibility for
the supervision, retention, and development of Restaurant employees and
operating personnel, (iv) using his/her best efforts to promote the Restaurant's
image in the community that it serves, and (v) carrying out such other duties as
may be delegated from time to time by the officers of Silver Diner.

          (B) FULL TIME.  The Operating Partner shall devote his/her full time
and attention to operating the Restaurant.

          (C) EFFECTIVE DATE.  The date the Operating Partner tenders to SDI
full payment for the mandatory Common Stock investment described in Section
4(a).

          (D) PROXIMITY OF RESIDENCE.  In order to maximize the effectiveness
of the Operating Partner's performance, the Operating Partner agrees to 
establish his/her primary residence within ________________(      ) miles of the
Restaurant and to maintain his/her primary residence within such proximity to
the Restaurant for the duration of this Certificate and Agreement unless a
modification is approved by the Board of Directors of SDI.  If the primary
residence of the Operating Partner does not currently meet this proximity
requirement, the Operating Partner agrees to relocate his/her primary residence
on or before ______________ in order to meet such proximity requirement and
acknowledges that Profit-Sharing distributions hereunder will be suspended in
the event of a failure to so relocate by such date.


     2.   BASE SALARY; BENEFITS; PROFIT SHARING.

     In consideration of the Operating Partner's services, commencing on the
Effective Date the Operating Partner shall (i) receive from Silver Diner the
Base Salary and benefits described below and (ii) be entitled to participate and
share in the Restaurant's operating income described below.
<PAGE>
 
          (A) BASE SALARY AND BENEFITS.  The annual Base Salary of the Operating
Partner shall be $45,000 payable bi-weekly.  Silver Diner shall also provide
such benefits as may generally be provided to other management employees, (which
may change from time to time) including health and dental insurance for the
Operating Partner and eligible members of his/her family, and two weeks of
vacation per year, with scheduling approved by Silver Diner.

          (B) MONTHLY PROFIT SHARING.  The Operating Partner shall be entitled
to receive in cash five percent (5%) of the monthly Restaurant Operating Income
(as defined below) of the Restaurant, which amount shall be paid to the
Operating Partner within thirty (30) days of the close of the month, subject to
the terms and conditions of this paragraph.  As used in this Certificate of
Participation:

              .   A month shall mean that period of time as reflective of the
                  monthly accounting period then being used by Silver Diner for
                  financial reporting purposes, which period now consists of
                  four weeks or 28 days, and

              .   Restaurant Operating Income shall mean the net sales of the
                  Restaurant determined by SDI in accordance with generally
                  accepted accounting principles consistently applied ("GAAP")
                  for the month less (i) cost of sales, (ii) labor (including
                  all salary and cash or stock bonus payments other than
                  Monthly Profit-Sharing and Quarterly Profit-Sharing payments
                  made to the Operating Partner under this Section 2), (iii)
                  operating expenses of the Restaurant (including allocated
                  corporate expenses on behalf of the Restaurant, such as
                  advertising and menu costs not to exceed 5% on an annual
                  basis), and (iv) a deemed annual occupancy cost of $295,000
                  with respect to all facilities other than the Rockville
                  facility (the occupancy costs of which shall be separately
                  determined).

          SDI will establish targeted margins for the Restaurant. If the actual
margin experience with respect to any month falls below the targeted margin for
such month by two percent (2%) or more, then no payment of the above-referenced
five percent (5%) profit-sharing amount will be paid until a determination is
made of the actual margin experience for the quarter in which such month
occurred. If the actual margin for the Restaurant with respect to such quarter
does not fall below the targeted margin for the quarter by two percent (2%) or
more, than any prior deferred monthly payments of the profit-sharing amount will
be paid over to the Operating Partner within thirty (30) days of the close of
the quarter.

          If the actual margin for the Restaurant falls below the targeted
margin for the quarter by two percent (2%) or more, then no monthly profit-
sharing payments will be made to the Operating Partner with respect to such
quarter and any monthly profit-sharing payments previously made to such
Operating Partner during the quarter will be treated as unearned payments which
will reduce, on a dollar for dollar basis, profit-sharing payments otherwise
payable to such Operating Partner with respect to future months of operation.

          (C) QUARTERLY POSITIVE SALES PROFIT SHARING. The Operating Partner
shall be entitled to receive in cash two percent (2%) of the Restaurant
Operating Income for each fiscal quarter if his/her Restaurant has positive same
store sales for the quarter. Appendix I attached hereto sets forth the methods
to be used in determining whether there are positive same store sales.
<PAGE>
 
          (D) QUARTERLY OPERATIONAL GOAL PROFIT-SHARING.  The Operating Partner
shall be entitled to receive in cash two percent (2%) of the Restaurant
Operating Income for each fiscal quarter if his/her Restaurant achieves its
operational goal for such quarter. For these purposes, SDI will establish on a
periodic basis the criteria (such as favorable exit interviews) to be used to
target and measure operational goals for each quarter. Such measurement
methodology shall be communicated to the Operating Partner prior to the
commencement of the time period to which the standard of measurement will apply.

     3.   RESTRICTED STOCK AWARDS.

          Silver Diner will issue to the Operating Partner at the times and in
the amounts specified below that number of fully paid and non-assessable shares
of SDI Common Stock ("Common Stock") as provided below.

          (A) ANNUAL AWARDS.  Subject to the terms of Section 5 and prior to any
termination under Section 6 and subject to the annual approval of the Board of
Directors of SDI, the Operating Partner shall be awarded on a calendar basis
that number of shares of Common Stock as shall be determined by dividing (i) the
closing price of the shares of Common Stock on the NASDAQ National Market System
on the day immediately preceding each Award Date into (ii) the Award Amount, as
defined below.  For these purposes, the Board of Directors of SDI has
specifically reserved the right to review performance on an annual basis and, in
its sole discretion, to reduce or eliminate the maximum Award Amount otherwise
payable to an Operating Partner pursuant to the following schedule if
appropriate.

          For these purposes, the first Award Date shall constitute the December
          31 immediately following the Effective Date. Subsequent Award Dates
          shall occur on the December 31 of each subsequent calendar year
          commencing on and after the Effective Date. The Award Amount with
          respect to the first Award Date (consisting of the first December 31
          following the Effective Date) shall be computed by multiplying (i) an
          amount of up to a maximum of $5,000 by (ii) a fraction, the numerator
          of which is the number of days occurring between the Effective Date
          and December 31 of the calendar year in which the Effective Date
          occurs and the denominator of which is 365. The Award Amount with
          respect to future Award Dates, together with the Vesting Date for each
          Award, as described in Section 5(c), is set forth below:

 
                                                        END OF RESTRICTION
                                                        PERIOD AND
AWARD AMOUNT                   AWARD DATE               VESTING DATE
------------                   ----------               ------------
Stock acquired pursuant     Effective Date              Sixth December 31
to 4(a) (Mandatory                                      occurring after the
Investment) and                                         Effective Date 
Section 4 (b) (Optional                                 (12/31/__)
Investment)
 
Pro-Rata portion of         1st December 31             Fifth December 31
up to a maximum of          following date of           following date of the
$5,000, as described        hire (12/31/__)             the Award (12/31/__)
 
Up to a maximum of          2nd  December 31 follow-    Fourth December 31
$5,000                      ing date of hire -          following date of the
                            (12/31   )                  Award - (12/31/      )
<PAGE>
 
Up to a maximum of          3rd  December 31 follow-    Third December 31
$7,500                      ing Effective Date -        following date of the
                            (12/31/   )                 Award - (12/31/  )
                          
Up to a maximum of          4th  December 31 follow-    Third December 31
$7,500                      ing Effective Date -        following date of the
                            (12/31/   )                 Award - (12/31/  )
                          
Up to a maximum of          5th  December 31 follow-    Third December 31
$10,000                     ing Effective Date -        following date of the
                            (12/31/  )                  Award - (12/31/  )
                          
Up to a maximum of          6th December 31 follow-     Third December 31
$10,000                     ing Effective Date -        following date of the
                            (12/31/  )                  Award - (12/31/  )

          (B) RESTRICTIONS.  The shares of Common Stock awarded to the Operating
Partner shall be subject to each of the restrictions and limitations contained
in Section 5.

     4.   SILVER DINER STOCK INVESTMENT.

     The Operating Partner shall be obligated on the Effective Date to invest
$12,500 in Silver Diner and shall have the option to invest an additional
$12,500 as follows:

          (A) MANDATORY INVESTMENT.  The Operating Partner shall be required to
purchase for cash 8,000 shares of Common Stock at a price equal to the closing
price of the shares of Common Stock on the NASDAQ National Market System on the
day immediately preceding the date that the Operating Partner pays for such
shares (the "Closing Price"), which date must be on or before sixty (60) days
following the date of the execution of this Agreement.

          (B) OPTIONAL INVESTMENT.  The Operating Partner shall also have the
option, but not the obligation, to invest an additional $12,500 in SDI by
purchasing shares of Common Stock at a price equal to 50% of the Closing Price.

          (C) PAYMENT.  The Operating Partner shall pay the purchase price for
the shares of Common Stock in cash on or before the Effective Date.  The
Operating Partner understands that failure to do so will result in no payment or
accrual of monthly profit sharing or quarterly positive sales profit sharing and
in no stock awards being granted or accrued until the purchase price is paid.

          (D) SILVER DINER REPURCHASE RIGHT.  Silver Diner shall have the
option, but not the obligation, to purchase the shares of Common Stock acquired
by the Operating Partner pursuant to Sections 4(a) and 4(b) at any time during
the ninety (90) day period following Termination of this Certification of
Participation (except if Termination is by reason of death or disability as
provided below) if Termination occurs at any time prior to the sixth (6th)
December 31 following the Effective Date (12/31/      ) on payment to the
Operating Partner in case of the amount originally paid by the Operating Partner
to SDI to acquire such shares from SDI without payment of any premium or
interest.

          (E) BANK LOAN DEFAULT.  If the Operating Partner borrows money from a
bank for all or part of the purchase price for his/her purchase of common shares
of Silver Diner pursuant to the mandatory or optional investment provisions set
forth above, which bank loan is secured by a pledge of all of such purchased
shares, then the repayment of such loan shall be effectuated through a payroll
withholding mechanism established between Silver Diner and the applicable bank.
If the Operating Partner nevertheless defaults on such bank loan, the bank
<PAGE>
 
shall have the right to send notice of such default to Silver Diner and request
that Silver Diner repurchase the pledged shares. Silver Diner shall have the
right, but not the obligation, during the ten (10) day period following receipt
of such notice and request from the bank to repurchase the pledged shares in
cash of the amount originally paid by the Operating Partner to SDI, without
payment of any premium or interest. If Silver Diner does not exercise such
repurchase right, the bank may dispose of the pledged shares free of any
restrictions on transferability other than under applicable federal and state
securities laws.

          (F) TRANSFER RESTRICTIONS; LIENS.  All shares of Common Stock acquired
by the Operating Partner pursuant to Sections 4(a) (Mandatory Investment) and
4(b) (Optional Investment) shall be subject to the provisions of Sections 4(d)
(Silver Diner Repurchase Right), 4(e) (Bank Loan Default), 5(a) (Stock Transfer
Restrictions), 5(b) (Stock Dividends, etc.), and 5(d) (Legends) and 5(e) (Escrow
of Shares of Common Stock) for a period of five years following the Effective
Date.

     5.   STOCK TRANSFER RESTRICTIONS, VESTING; LEGENDS.

          (A) STOCK TRANSFER RESTRICTIONS.  The Operating Partner agrees that
until the Vesting Date occurs with respect to the Common Stock acquired pursuant
to Section 3 or 4 (which Vesting Date appears in the chart contained in Section
3(a)), he/she shall not, directly or indirectly, sell, assign, transfer, convey,
give, bequeath, grant a security interest in, otherwise encumber, make a short
sale of, loan, grant any option for the purchase of, or otherwise dispose of,
voluntarily or involuntarily, the Common Stock acquired pursuant to Section 3 or
4 to which the restriction period relates and any such transfer or attempted
transfer shall be void; provided, however, that all provisions of this Section
                        --------  -------                                     
5(a) shall terminate (i) immediately in the event of the Operating Partner's
death and (ii) on Termination by SDI in the event of the Operating Partner's
disability.

          (B) STOCK DIVIDENDS, SPLITS, RECLASSIFICATIONS AND SUBDIVISIONS.  In
the event that SDI, or any successor entity, declares a dividend or makes a
distribution on the Common Stock payable in securities or subdivides or
reclassifies the Common Stock or reorganizes, consolidates, or merges with or
into any other legal entity, then any securities issues as a result of any such
event shall be deemed to constitute part of the shares of Common Stock sold or
Awarded to the Operating Partner and shall be deemed to constitute part of the
shares of Common Stock sold or Awarded to the Operating Partner and shall be
subject to Sections 3, 4 and 5.

          (C) VESTING.  Each share of Common Stock awarded to the Operating
Partner pursuant to Section 3 (i) shall, except for death or disability, as
determined by SDI, be forfeited and canceled without payment of any
consideration to the Operating Partner if this Certificate of Participation is
Terminated (as defined below) during the Restriction Period applicable to such
share of Common Stock or described in Paragraph (a) of Section 5 and (ii) shall
become fully vested upon the expiration of such Restriction Period (the "Vesting
Date").  For purposes of convenience the Vesting Date is shown in the Chart
contained in Section 3(a).

          (D) LEGENDS.  Each certificate representing shares of Common Stock
issued pursuant to this Certificate of Participation shall conspicuously bear a
legend in substantially the following form:

          "The transfer of the Common Stock (by sales, transfer, conveyance,
          gift, bequest, hypothecation, pledge or otherwise) represented by this
          certificate is restricted and the shares of Common Stock are, pursuant
          to the terms of an agreement to which the Corporation is a party, as
          such agreement may be amended, supplemented, or otherwise modified
          from time to time, subject either (i) to the right of the corporation
          to redeem such shares for cash at a price substantially less than the
          price at which the shares of Common Stock may be trading, or (ii) to
          forfeiture without payment of any consideration and the Corporation
          has a lien on the Common Stock represented by this certificate to
          ensure payment and performance of all obligations thereunder.  A copy
          of the Agreement is on file at the Corporation's office."

          (E)  ESCROW OF SHARES OF COMMON STOCK.  Each share of Common Stock
issued to the Operating Partner as an Award under Section 3 and each share of
Common Stock acquired by the Operating Partner pursuant
<PAGE>
 
to Section 4(a) (Mandatory Investment) and Section 4(b) (Optional Investment)
will be held in escrow for the benefit of the Operating Partner by the law firm
of Arent Fox Kintner Plotkin & Kahn, PLLC or such other escrow agent as may be
designated by SDI from time to time, until the restrictions relating to such
share of Common Stock have been eliminated. If any shares of Common Stock are
pledged as collateral for a loan used to purchase such shares of Common Stock
and if such shares of Common Stock are released from collateral during the
restriction period relating to such shares, then upon their release from
collateral, such shares shall be delivered to the escrow agent described above
for the duration of such restriction period. In the event that a forfeiture of a
share of Common Stock arises under Section 6(b), the forfeited share shall be
released from escrow and delivered to SDI. In the event the restriction period
with respect to a share of Common Stock lapses prior to any forfeiture of such
share, the share of Common Stock shall be released from escrow and delivered
directly to the Operating Partner.

     6.   TERMINATION.

          (A) TERMINATION BY SILVER DINER OR BY THE OPERATING PARTNER.  Silver
Diner reserves the right to terminate the services of the Operating Partner and,
except as provided in Section 6(c), all obligations and liabilities under this
Certificate of Participation at any time for any reason in its sole and absolute
discretion and with or without cause. The Operating Partner reserves the right
to resign and terminate, except as provided in Section 6(c), all obligations and
liabilities under this Certificate of Participation at any time for any reason
in his/her sole and absolute discretion and with or without cause.

          (B) EFFECTS OF TERMINATION.  As used in this Certificate of
Participation, "Termination" shall mean termination pursuant to this Section 6.

              (I)   Following Termination for any reason, other than death or
the determination by Silver Diner of disability, the Operating Partner shall be
entitled to receive the Base Salary which has accrued prior to the date of
Termination, the Profit Participation which has accrued for the month or quarter
preceding the month or quarter in which Termination occurs and that number of
shares of Common Stock acquired by the Operating Partner pursuant to Section 3
(the Award Shares) which shall have been held for the periods of time required
by Section 5 and the Operating Partner's right to the shares of Common Stock
which have not been held for the period of time required by Section 5 shall be
forfeited. In addition, the shares of Common Stock purchased by the Operating
Partner pursuant to Section 4 shall be subject to Silver Diner's option, but not
obligation, to purchase or redeem such shares as provided in Section 4(c)
(Termination) and 4(d) (Bank Loan Default).

              (II)  Following Termination for death or the determination by
Silver Diner of disability, the Operating Partner, and in the event of death,
the representative of the Operating Partner, shall be entitled to receive the
Base Salary which has accrued prior to the date of Termination, the Profit
Participation which has accrued for the month or quarter preceding the month or
quarter in which Termination occurs and all shares of SDI Common Stock issued to
the Operating Partner pursuant to Sections 3 and 4 shall become fully vested and
free and clear of any and all liens, claims or restrictions arising under or by
virtue of this Certificate of Participation.

              (III) Following Termination for any reason, the provisions of
Sections 7 through 20 shall remain in full force and effect.

          (C) EMPLOYMENT AT WILL.  Nothing contained in this Certificate of
Participation shall constitute or be evidence of any agreement or understanding,
express or implied, on the part of Silver Diner to employ the Operating Partner
for any specific period of time or create any obligation or liability other than
as specifically set forth herein and employment of the Operating Partner is and
shall remain an employment at will.
<PAGE>
 
     7.   CONFIDENTIAL INFORMATION.

     The Operating Partner agrees that all Confidential information (as defined
below) relating to Silver Diner or to its business and affairs, including
without limitation, any information whatsoever concerning its organization,
management or finances, shall at all times and notwithstanding that Termination
shall have occurred, be treated as confidential and shall not be used,
disclosed, divulged or otherwise placed at the disposal of any person or entity
except to the extent that (i) the parties hereto may otherwise agree in writing,
(ii) such information is required to be disclosed by law, (iii) such information
is otherwise publicly available other than by reason of a breach by such party
of this Section 7 or (iv) such information is submitted into evidence in any
legal proceedings between or among the parties.

     "CONFIDENTIAL INFORMATION" means all information, records, documents,
accounts and correspondence of every description regarding past, current or
future business activities, interests, methodology or affairs whether written,
recorded or stored by electronic, magnetic, electro-magnetic or other form or
process or otherwise in machine or computer readable form including without
limitation:

          (A)  business plans, research, know-how, development and survey
               information,

          (B)  customer, staff, and all other training manuals and product
               policy manuals, recipes, and

          (C)  planning and marketing strategies, procedures, techniques and
               information.

     8.   NON-COMPETITION.

     The Operating Partner agrees that during the period of time that he/she is
providing services hereunder and for a period ending on the first anniversary of
any Termination:

          (A) The Operating Partner will not engage, without first obtaining
Silver Diner's prior written consent, directly or indirectly within 25 miles of
a then existing Silver Diner Restaurant, in any restaurant business (x) with the
word "Diner" in its name or logo or which is commonly understood to be a diner
or (y) whose menu, trade dress and pricing are substantially similar to that
employed in the Silver Diner Restaurants, whether as employee, officer,
director, partner, joint venture, stockholder (other than the holder of less
than 5% of the stock of a corporation, the securities of which are traded on a
national securities exchange or in the over-the-counter market), consultant or
agent.

          (B) The Operating Partner will not engage, without first obtaining
Silver Diner's prior written consent, directly or indirectly, within the United
States, in any restaurant business with the word "Diner" in its name or logo or
which is commonly understood to be a diner, whether as employee, officer,
director, partner, joint venturer, stockholder (other than the holder of less
than 5% of the stock of a corporation, the securities of which are traded on a
national securities exchange or in the over-the-counter market), consultant or
agent.

          (C) The Operating Partner will not induce or attempt to persuade any
employee of Silver Diner to terminate his or her employment relationship in
order to enter into employment which is competitive with Silver Diner.
<PAGE>
 
          (D) It is the intent and understanding of each party hereto that if,
in any action before any court or agency legally empowered to enforce the
covenants contained in this Section 8 any term, any restriction, covenant or
promise contained therein is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such court or agency,
and such finding shall not, in any event, affect the enforceability of any other
term, restriction, covenant, or promise herein.

     9.   ENFORCEMENT COSTS.

     If any legal action or other proceeding is brought for the enforcement of
any right provided for in this Certificate of Participation, or because of an
alleged dispute or breach in connection with any provisions of any right
provided for in this Certificate of Participation, the party who shall
substantially prevail shall be entitled to recover from the other party all
reasonable attorneys' fees, court costs and all expenses (even if not taxable as
court costs), including, without limitation, all such fees, costs and expenses
incident to appeals, incurred in connection with such action or proceeding, in
addition to any other relief to which the party may be entitled.

     10.  WITHHOLDING OF TAXES.

     Silver Diner shall, to the extent permitted or required by law, have the
right to deduct from any payment of any kind otherwise due to the Operating
Partner any federal, state or local taxes of any kind required by law to be
withheld, including any withholding required on expiration of the restrictions
imposed on the shares of Common Stock awarded or sold to the Operating Partner
pursuant to the provisions of this Certificate of Participation.

     11.  TERM.

     The Term of this Certificate of Participation shall be five (5) years from
the Effective Date except that the provisions of Sections 5-20 shall survive the
Term.

     12.  APPLICABLE LAW AND VENUE.

     This Certificate of Participation shall be governed by and construed in
accordance with the laws of the State of Maryland. In the event of any legal or
equitable action arising under this Certificate of Participation, the parties
agree that the jurisdiction and venue of such action shall lie exclusively
within either the state courts of Maryland located in Montgomery County or the
United States District Court for the District of Maryland in Prince George's
County, Maryland, and the parties do hereby waive any other jurisdiction and
venue.

     13.  ASSIGNMENT PROHIBITED.

     This Certificate of Participation is personal to the Operating Partner and
he/she may not assign or alienate any of his/her obligations under this
Certificate of Participation without the written consent of Silver Diner. This
Certificate of Participation shall be binding upon Silver Diner and its
successors and assigns.

     14.  SEVERABILITY.

     If any part of this Certificate of Participation is contrary to, prohibited
by, or deemed invalid under applicable law or regulations, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Certificate of Participation shall not be
invalid and shall be given full force and effect so far as possible.
<PAGE>
 
     15.  WAIVERS.

     The failure or delay of either party at any time to require performance by
the other of any provision of this Certificate of Participation, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder, and any waiver by
either party of any breach of any provision of this Certificate of Participation
shall not be construed as a waiver of any continuing or succeeding breach of
such provision, a waiver of the provision itself, or a waiver of any right,
power or remedy under this Certificate of Participation.  No notice to or demand
on either party in any case shall, of itself, entitle such party to any other or
further notice or demand in similar or other circumstances.

     16.  REMEDIES CUMULATIVE.

     No remedy conferred upon any party pursuant to this Certificate of
Participation is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity, by
statute or otherwise.  No single or partial exercise by any party of any right,
power or remedy hereunder shall preclude any other or further exercise thereof.

     17.  WAIVER OF JURY TRIAL.

     The parties hereto hereby irrevocably covenant and agree not to elect a
trial by jury of any issues triable by a jury and waive any right to trial by
jury fully to the extent any such right should now or hereafter exist. This
waiver of right to a trial by jury is separately given, knowingly and
voluntarily but the Operating Partner and Silver Diner and this waiver is
intended to incorporate individually each instance and each issue as to which
the right to a trial by jury would otherwise occur.

     18.  ENTIRE AGREEMENT; AMENDMENTS.

     This Certificate of Participation incorporates the entire agreement between
the parties with respect to the subject matter of the Certificate of
Participation, and supersedes all other prior or contemporaneous agreements,
negotiations or discussions between the parties with respect to employment,
compensation and benefits and no change or modification shall be valid unless
made in writing and signed by both the parties.

     19.  NOTICES.

     All notices, consents, approvals and other communications given or made
pursuant hereto shall be in writing and shall be (a) delivered personally, (b)
by overnight courier, (c) transmitted by telecopier, or (d) by registered or
certified mail (postage prepaid, return receipt requested), in each case to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

          (A)  if to Silver Diner:

               Silver Diner, Inc.
               11806 Rockville Pike
               Rockville, Maryland 20852
               Attention: President

          (B)  if to the Operating Partner at the address maintained by Silver
               Diner for the Operating Partner.

     20.  This Certificate of Participation may be executed in counterparts, all
of which shall be considered one and the same agreement, it being understood
that all parties hereto need not sign the same counterpart.
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Certificate of
Participation as of the date first set forth above.

                              Silver Diner, Inc.

                              Silver Diner Development, Inc.


Date:__________________      By:_______________________________
                                  Robert T. Giaimo, President


Date:__________________      By:_______________________________
                                             , Operating Partner

By his or her signature above, the Operating Partner agrees to make the $12,500
minimum investment in Silver Diner pursuant to Section 4(a) and the Operating
Partner agrees to make an optional investment in Silver Diner of $______________
pursuant to Section 4(b).

                           CONFIRMATION OF PURCHASE
                           ------------------------

By the execution of this Confirmation of Purchase, the Operating Partner and
Silver Diner, Inc. acknowledge that the Operating Partner has completed the
purchase of Silver Diner, Inc. stock in accordance with the provisions of
Section 4(a) as of the _____ day of _________, 199__.


                             Silver Diner, Inc.

                             Silver Diner Development, Inc.


Date:__________________      By:_______________________________
                                  Robert T. Giaimo, President


Date:__________________      By:_______________________________
                                             , Operating Partner
<PAGE>
 
                                                                      APPENDIX I
                                   to Certificate and Agreement of Participation


           OPERATING PARTNER QUARTERLY POSITIVE SALES PROFIT SHARING
           ---------------------------------------------------------

     1.   If there are positive same Store sales for the quarter in question
(sales exceed target), the Operating Partner's share of the Restaurant Income
will be two percent (2%).

     2.   For existing Stores, the quarter sales target will be based upon sales
in the corresponding fiscal quarter for the prior fiscal year.

     3.   For new Stores, the quarterly sales target will be based upon a budget
to be established by Silver Diner for the fiscal quarter in which the Store is
opened and for the next four quarters. Such budget will be based upon an
estimate of the market for each particular location and Silver Diner's
investment in the Diner at each location. A sales target for the next two
quarters (5th and 6th) will be based upon the 3rd and 4th quarters (seasonally
adjusted). It is anticipated that this method will factor out the "honeymoon"
performance of a new Store from opening through the 1st and 2nd full quarters.
Commencing with the 7th full quarter after the Store opening, the sales target
will be based upon the sales in the corresponding quarter of the prior fiscal
year.

     4.   Recognizing that circumstances could occasionally cause a Store's
sales for any quarter to be less than the corresponding quarter of the prior
fiscal year, the Quarterly Positive Sales Profit Sharing will be paid if the
Store's year-to-date sales equal or exceed targeted year-to-date sales.

     5.   In preparing sales targets and in comparing quarterly sales with sales
in prior periods, Silver Diner will take into account the occasional impact of
53-week fiscal years.

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