Exhibit 10.20
                Silver Diner, Inc. Employee Stock Purchase Plan
     together with form of Subscription Agreement and Notice of Withdrawal





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                               SILVER DINER, INC.

                       1996 EMPLOYEE STOCK PURCHASE PLAN


         The following constitute the provisions of the Employee Stock Purchase
of Silver Diner, Inc. (the "Company").

         1.       Purpose.  The  purpose of the Plan is to provide  employees
of the Company and its Designated  Subsidiaries  with an opportunity to purchase
Common Stock  of the  Company.  It is the  intention  of the  Company  to have
the Plan qualify as an "Employee  Stock  Purchase Plan" under Section 423 of the
Internal Revenue Code of 1986, as amended. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.

         2.       Definitions.

                  (a) "Board" shall mean the Board of Directors of the Company.

                  (b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                  (c) "Common Stock" shall mean the Common Stock, $0.00074 par
value, of the Company.

                  (d) "Company" shall mean Silver Diner, Inc., a Delaware
corporation.

                  (e) "Compensation"  shall mean all regular straight time gross
earnings excluding payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions and other compensation.

                  (f) "Continuous  Status As An Employee" shall mean the absence
of any interruption or termination of service as an Employee.  Continuous Status
as an Employee  shall not be  considered  interrupted  in the case of a leave of
absence  agreed to in writing by the Company,  provided that such leave is for a
period  of not more than 90 days or  reemployment  upon the  expiration  of such
leave is guaranteed by contract or statute.

                  (g) "Contributions" shall mean all amounts credited to the
account of a participant pursuant to the Plan.

                  (h) "Designated  Subsidiaries"  shall  mean  the  Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.



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                  (i) "Employee"  shall  mean any person,  including an officer,
who is  customarily  employed  for at least  twenty (20) hours per week and more
than five (5) months in a calendar year by the Company or one of its  Designated
Subsidiaries.

                  (j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

                  (k) "Exercise Date" shall mean the last day of each Offering
Period of the Plan.

                  (l) "Offering  Date" shall mean the first business day of each
Offering  Period  of the  Plan,  except  that in the case of an  individual  who
becomes an eligible  Employee after the first business day of an Offering Period
but  prior to the  first  business  day of the  last  calendar  quarter  of such
Offering  Period,  the term "Offering Date" shall mean the first business day of
the calendar  quarter  coinciding  with or next succeeding the day on which that
individual becomes an eligible Employee.

                      Options granted after the first business day of an
Offering Period will be subject to the same terms as the options  granted on the
first  business  day of such Offering  Period  except that they will have a
different  grant date (thus, potentially,  a different  exercise price) and,
because they expire at the same time as the options granted on the first
business day of such Offering Period, a shorter term.

                  (m) "Offering Period" shall mean a period of twelve (12)
months.

                  (n) "Plan" shall mean this Employee Stock Purchase Plan.

                  (o)  "Subsidiary"  shall  mean  a  corporation,   domestic  or
foreign, of which not less than 50% of the voting shares are held by the Company
or a  Subsidiary,  whether or not such  corporation  now exists or is  hereafter
organized or acquired by the Company or a Subsidiary.

         3.       Eligibility.

                  (a)  Any  person  who has  been  continuously  employed  as an
Employee for three (3) months as of the Offering Date of a given Offering Period
shall be  eligible  to  participate  in such  Offering  Period  under  the Plan,
provided  that such person was not  eligible  to  participate  in such  Offering
Period as of any prior Offering Date, and further,  subject to the  requirements
of paragraph 5(a) and the limitations imposed by Section 423(b) of the Code.

                  (b)   Any   provisions   of   the   Plan   to   the   contrary
notwithstanding,  no Employee  shall be granted an option under the Plan (i) if,
immediately  after the grant,  such  Employee  (or any other  person whose stock
would be attributed to such Employee pursuant to Section 424(d)

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of the Code) would own stock and/or hold  outstanding  options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any  subsidiary of the Company,  or
(ii) which permits his or her rights to purchase  stock under all employee stock
purchase  plans  (described  in Section  423 of the Code) of the Company and its
Subsidiaries  to accrue at a rate which  exceeds  Twenty-Five  Thousand  Dollars
($25,000) of fair market value of such stock (determined at the time such option
is granted) for each  calendar year in which such option is  outstanding  at any
time.

         4.       Offering  Periods.  The Plan  shall be  implemented  by a
series of Offering  Periods,  with a new Offering  Period  commencing on January
1 of each year  (or at such  other  time or  times as may be  determined  by the
Board of Directors).  The  Plan  shall  continue  until  terminated  in
accordance  with paragraph 19 hereof.  The Board of Directors of the Company
shall have the power to change the duration and/or the frequency of Offering
Periods with respect to future  offerings  without  stockholder  approval if
such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first  Offering Period to be affected.

         5.       Participation.

                  (a) An eligible  Employee may become a participant in the Plan
by completing a  subscription  agreement on the form provided by the Company and
filing it with the Company's  Office of Human  Resources prior to the applicable
Offering Date, unless a later time for filing the subscription  agreement is set
by the Board for all eligible  Employees with respect to a given  offering.  The
subscription  agreement  shall  set forth the  percentage  of the  participant's
Compensation  (which shall not be less than 1% and not more than 10%) to be paid
as Contributions pursuant to the Plan.

                  (b) Payroll  deductions  shall  commence on the first  payroll
following  the Offering  Date and shall end on the last payroll paid on or prior
to the  Exercise  Date of the  offering to which the  subscription  agreement is
applicable, unless sooner terminated by the participant as provided in paragraph
10.

         6.       Method of Payment of Contributions.

                  (a) The  participant  shall elect to have  payroll  deductions
made on each payday  during the  Offering  Period in an amount not less than one
percent  (1%)  and not  more  than  ten  percent  (10%)  of  such  participant's
Compensation  on each such payday;  provided  that the aggregate of such payroll
deductions  during the Offering Period shall not exceed ten percent (10%) of the
participant's  aggregate  Compensation  during said Offering Period. All payroll
deductions  made by a participant  shall be credited to his or her account under
the Plan. A participant may not make any additional payments into such account.

                  (b) A participant may discontinue his or her participation in
the Plan as provided in paragraph 10, or, on one occasion only during the
Offering Period, may decrease,

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but may not increase,  the rate of his or her Contributions  during the Offering
Period by completing  and filing with the Company a new  subscription  agreement
within  the ten (10) day  period  immediately  preceding  the  beginning  of any
calendar  quarter  during  the  Offering  Period.  The  change in rate  shall be
effective  as of the  beginning of the calendar  quarter  following  the date of
filing of the new subscription agreement.

                  (c) Notwithstanding the foregoing,  to the extent necessary to
comply  with  Section  423(b)(8)  of the  Code  and  paragraph  3(b)  herein,  a
participant's  payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current  calendar year that
the  aggregate  of all  payroll  deductions  accumulated  with  respect  to such
Offering  Period and any other  Offering  Period ending within the same calendar
year equal $21,250.  Payroll deductions shall recommence at the rate provided in
such participant's Subscription Agreement at the beginning of the first Offering
Period  which  is  scheduled  to end  in the  following  calendar  year,  unless
terminated by the participant as provided in paragraph 10.

         7.       Grant of Option.

                  (a) On  the  Offering  Date  of  each  Offering  Period,  each
eligible  Employee  participating  in such  Offering  Period shall be granted an
option to purchase on each Exercise Date during such Offering Period a number of
shares of the Company's  Common Stock  determined  by dividing  such  Employee's
Contributions  accumulated  prior  to such  Exercise  Date and  retained  in the
participant's  account as of the Exercise  Date by the lower of (i)  eighty-five
percent (85%) of the fair market value of a share of the Company's  Common Stock
on the Offering Date, or (ii) eighty-five percent (85%) of the fair market value
of a share  of the  Company's  Common  Stock  on the  Exercise  Date;  provided,
however,  that the maximum number of shares an Employee may purchase during each
Offering Period shall be determined at the Offering Date by dividing  $25,000 by
the fair market value of a share of the  Company's  Common Stock on the Offering
Date,  and  provided  further  that  such  purchase  shall  be  subject  to  the
limitations set forth in Sections 3(b) and 12 hereof. The fair market value of a
share of the  Company's  Common Stock shall be determined as provided in Section
7(b) herein.

                  (b) The  option  price per share of the  shares  offered  in a
given Offering  Period shall be the lower of (i) 85% of the fair market value of
a share of the Common Stock of the Company on the Offering  Date; or (ii) 85% of
the fair  market  value of a share of the  Common  Stock of the  Company  on the
Exercise  Date.  The fair market value of the Company's  Common Stock on a given
date shall be  determined  by the Board on its  discretion  based on the closing
price of the Common  Stock for such date (or, in the event that the Common Stock
is not traded on such date,  on the  immediately  preceding  trading  date),  as
reported by the National  Association of Securities Dealers Automated  Quotation
(NASDAQ)  National Market System or, if such price is not reported,  the mean of
the bid and asked prices per share of the Common Stock as reported by NASDAQ or,
in the event the Common  Stock is listed on a stock  exchange,  the fair  market
value per share shall be the closing price on such

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exchange on such date (or,  in the event that the Common  Stock is not traded on
such date, on the immediately  preceding  trading date), as reported in The Wall
Street Journal.

         8.       Exercise of Option.  Unless a participant withdraws from the
Plan as provided in  paragraph  10, his or her option for the purchase of shares
will be exercised  automatically  on the Exercise Date of the Offering  Period,
and the maximum number of full shares subject to option will be purchased for
him or her at the applicable option price with the accumulated  Contributions in
his or her account.  The shares  purchased  upon exercise of an option
hereunder  shall be deemed to be  transferred to the  participant  on the
Exercise Date.  During his lifetime,  a participant's  option to purchase
shares  hereunder is exercisable only by him or her.

         9.       Delivery. As promptly as practicable after the Exercise Date
of each Offering Period, the Company shall arrange the delivery to each
participant,  as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.  Any cash remaining to the credit of a
participant's  account under the Plan after a purchase  by him or her of shares
at the  termination  of each  Offering  Period,  or which is  insufficient  to
purchase a full share of Common Stock of the Company, shall be returned to said
participant.

         10.      Withdrawal; Termination of Employment.

                  (a) A  participant  may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
the  Exercise  Date of the  Offering  Period  by  giving  written  notice to the
Company. All of the participant's  Contributions  credited to his or her account
will  be paid to him or her  promptly  after  receipt  of his or her  notice  of
withdrawal  and his or her option for the current  period will be  automatically
terminated, and no further Contributions for the purchase of shares will be made
during the Offering Period.

                  (b) Upon termination of the participant's Continuous Status as
an Employee  prior to the Exercise  Date of the Offering  Period for any reason,
including retirement or death, the Contributions  credited to his or her account
will be  returned  to him or her or,  in the  case of his or her  death,  to the
person or persons  entitled  thereto  under  paragraph 14, and his or her option
will be automatically terminated.

                  (c) In the event an  Employee  fails to  remain in  Continuous
Status as an Employee  of the  Company  for at least  twenty (20) hours per week
during the  Offering  Period in which the employee is a  participant,  he or she
will be deemed to have elected to withdraw  from the Plan and the  Contributions
credited  to his or her  account  will be  returned to him or her and his or her
option terminated.


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                  (d) A participant's  withdrawal from an offering will not have
any effect upon his or her  eligibility to participate in a succeeding  offering
or in any similar plan which may hereafter be adopted by the Company.

         11.      Interest.  No interest shall accrue on the Contributions of a
participant in the Plan.

         12.      Stock.

                  (a) The maximum number of shares of the Company's Common Stock
which shall be made  available for sale under the Plan shall be 300,000  shares,
subject to adjustment upon changes in  capitalization of the Company as provided
in paragraph 18. If the total number of shares which would  otherwise be subject
to options  granted  pursuant to Section 7(a) hereof on the Offering  Date of an
Offering  Period  exceeds  the number of shares  then  available  under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding),  the  Company  shall  make a pro  rata  allocation  of the  shares
remaining  available  for  option  grant  in as  uniform  a  manner  as shall be
practicable and as it shall determine to be equitable.  Any amounts remaining in
an  Employee's  account  not applied to the  purchase of stock  pursuant to this
Section 12 shall be refunded on or promptly  after the  Exercise  Date.  In such
event,  the Company shall give written notice of such reduction of the number of
shares  subject  to the  option  to each  Employee  affected  thereby  and shall
similarly reduce the rate of Contributions, if necessary.

                  (b) The  participant  will have no interest or voting right in
shares covered by his or her option until such option has been exercised.

                  (c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.

         13.      Administration. The Board, or a committee named by the Board,
shall supervise and administer the Plan and shall have full power to adopt,
amend and rescind any rules deemed desirable and appropriate for the
administration of the Plan and not inconsistent with the Plan, to construe and
interpret the Plan, and to make all other  determinations  necessary or
advisable for the administration of the Plan. The  composition of the committee
shall be in accordance  with the requirements  to obtain or retain any available
exemption from the operation of Section  16(b)  of  the  Exchange  Act,
pursuant  to  Rule  16b-3  promulgated thereunder.

         14.      Designation of Beneficiary.

                  (a)  A  participant  may  file  a  written  designation  of  a
beneficiary   who  is  to  receive  any  shares  and  cash,  if  any,  from  the
participant's  account under the Plan in the event of such  participant's  death
subsequent to the end of the Offering Period but prior to delivery to

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him or her of such  shares  and cash.  In  addition,  a  participant  may file a
written  designation  of a  beneficiary  who is to  receive  any  cash  from the
participant's  account under the Plan in the event of such  participant's  death
prior to the Exercise Date of the Offering  Period.  If a participant is married
and the  designated  beneficiary  is not the spouse,  spousal  consent  shall be
required for such designation to be effective.

                  (b) Such  designation  of  beneficiary  may be  changed by the
participant  (and his or her spouse,  if any) at any time by written notice.  In
the event of the death of a  participant  and in the  absence  of a  beneficiary
validly   designated  under  the  Plan  who  is  living  at  the  time  of  such
participant's  death,  the Company  shall deliver such shares and/or cash to the
executor  or  administrator  of the  estate  of the  participant,  or if no such
executor or administrator  has been appointed (to the knowledge of the Company),
the  Company,  in its  discretion,  may deliver  such shares  and/or cash to the
spouse or to any one or more dependents or relatives of the  participant,  or if
no spouse,  dependent  or relative is known to the  Company,  then to such other
person as the Company may designate.

         15.      Transferability.  Neither Contributions credited to a
participant's account nor any rights  with  regard to the  exercise of an option
or to receive shares  under  the Plan  may be  assigned,  transferred,  pledged
or  otherwise disposed of in any way (other than by will, the laws of descent
and distribution or as provided in paragraph 14 hereof) by the  participant.
Any such attempt at assignment,  transfer,  pledge or other  disposition  shall
be  without  effect, except that the  Company may treat such act as an election
to withdraw  funds in accordance with paragraph 10.

         16.      Use of Funds.  All Contributions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such Contributions.

         17.      Reports.   Individual   accounts  will  be  maintained  for
each participant  in the Plan.  Statements of account will be given to
participating Employees  promptly following the Exercise Date, which statements
will set forth the amounts of Contributions, the per share purchase price, the
number of shares purchased and the remaining cash balance, if any.

         18.      Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company,  the number of shares of
Common Stock covered by each option under the Plan which has not yet been
exercised  and the number of shares of Common Stock which have been  authorized
for issuance under the  Plan  but  have  not  yet  been  placed  under  option
(collectively,  the "Reserves"),  as well as the price per share of  Common
Stock  covered  by each option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any  increase or decrease in the number of
issued  shares of Common Stock  resulting  from a stock  split,  reverse  stock
split,  stock  dividend, combination or  reclassification  of the Common Stock,
or any other increase or decrease in the number of shares of Common  Stock
effected  without  receipt of consideration by the Company; provided,

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however, that conversion of any convertible  securities of the Company shall not
be  deemed  to have been  "effected  without  receipt  of  consideration."  Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive.  Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities  convertible  into
shares of stock of any class,  shall affect, and no adjustment by reason thereof
shall be made with  respect  to, the  number or price of shares of Common  Stock
subject to an option.

                  In the event of the proposed dissolution or liquidation of the
Company,   the  Offering  Period  will  terminate   immediately   prior  to  the
consummation of such proposed action, unless otherwise provided by the Board. In
the event of a proposed  sale of all or  substantially  all of the assets of the
Company,  or the merger of the Company  with or into another  corporation,  each
option  under  the Plan  shall  be  assumed  or an  equivalent  option  shall be
substituted  by such  successor  corporation  or a parent or  subsidiary of such
successor corporation,  unless the Board determines, in the exercise of its sole
discretion  and in lieu of such  assumption  or  substitution,  to  shorten  the
Offering  Period  then in  progress  by  setting a new  Exercise  Date (the "New
Exercise  Date").  If the Board shortens the Offering Period then in progress in
lieu of assumption or  substitution  in the event of a merger or sale of assets,
the Board shall notify each participant in writing, at least ten (10) days prior
to the New Exercise Date,  that the Exercise Date for his or her option has been
changed to the New  Exercise  Date and that his or her option will be  exercised
automatically on the New Exercise Date,  unless prior to such date he or she has
withdrawn from the Offering  Period as provided in paragraph 10. For purposes of
this  paragraph,  an option granted under the Plan shall be deemed to be assumed
if,  following  the sale of assets or merger,  the option  confers  the right to
purchase, for each share of option stock subject to the option immediately prior
to the sale of assets or merger, the consideration (whether stock, cash or other
securities  or property)  received in the sale of assets or merger by holders of
Common  Stock for each share of Common Stock held on the  effective  date of the
transaction  (and if such holders were  offered a choice of  consideration,  the
type of  consideration  chosen by the holders of a majority  of the  outstanding
shares of Common Stock); provided,  however, that if such consideration received
in the sale of assets or merger was not  solely  common  stock of the  successor
corporation or its parent (as defined in Section 424(e) of the Code),  the Board
may, with the consent of the successor corporation and the participant,  provide
for the  consideration  to be received  upon exercise of the option to be solely
common  stock of the  successor  corporation  or its parent equal in fair market
value to the per share consideration received by holders of Common Stock and the
sale of assets or merger.

                  The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding  option, in the event that
the  Company  effects  one or more  reorganizations,  recapitalizations,  rights
offerings or other increases or reductions of shares of its  outstanding  Common
Stock,  and in the event of the Company being  consolidated  with or merged into
any other corporation.


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         19.      Amendment or Termination. The Board of Directors of the
Company may at any time terminate or amend the Plan.  Except as provided in
paragraph 18, no such  termination may affect options  previously  granted,  nor
may an amendment make any change in any option  theretofore  granted which
adversely  affects the rights of any participant.  In addition,  to the extent
necessary to comply with Rule 16b-3  under the  Exchange  Act,  or under
Section 423 of the Code (or any successor rule or provision or any applicable
law or  regulation),  the Company shall  obtain  stockholder  approval in such a
manner and to such a degree as so required.

         20.      Notices.  All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

         21.      Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option  unless the  exercise of such option and the  issuance
and delivery of such  shares  pursuant  thereto  shall  comply  with all
applicable provisions  of law,  domestic or foreign,  including,  without
limitation,  the Securities Act of 1933, as amended,  the Exchange Act, the
rules and regulations promulgated  thereunder,  and the  requirements of any
stock exchange upon which the shares may then be listed,  and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

                  As a condition to the  exercise of an option,  the Company may
require the person  exercising  such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without  any  present  intention  to sell or  distribute  such shares if, in the
opinion of counsel for the Company,  such a representation is required by any of
the aforementioned applicable provisions of law.

         22.      Term of Plan.  The Plan became effective upon its adoption by
the Board of Directors on September 11, 1996 and shall continue in effect for a
term of twenty (20) years unless sooner terminated under paragraph 19.

         23.      Additional  Restrictions of Rule 16b-3. The terms and
conditions of options granted  hereunder to, and the purchase of shares by,
persons subject to Section 16 of the Exchange Act shall comply with the
applicable  provisions  of Rule  16b-3.  This Plan  shall be  deemed to
contain,  and such  options  shall contain,  and the shares issued upon exercise
thereof shall be subject to, such additional  conditions  and  restrictions  as
may be  required by Rule 16b- 3 to qualify for the  maximum  exemption  from
Section 16 of the  Exchange  Act with respect to Plan transactions.

         24.      Severability.  With respect to persons subject to Section 16
of the Exchange Act, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the Exchange
Act.  To the extent any provision of the Plan or

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any action by the  administrator  of the Plan  fails to so  comply,  it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
administrator of the Plan.



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                                                               New Election ___
                                                         Change of Election ___


                               SILVER DINER, INC.

                       1996 EMPLOYEE STOCK PURCHASE PLAN
                             SUBSCRIPTION AGREEMENT


         1. I,                                    , hereby elect to participate
in the Silver Diner Inc. 1996 Employee Stock Purchase Plan (the "Plan") for the
Offering Period                     , 19    to                     , 19   , and
subscribe to purchase shares of the Company's Common Stock in accordance with
this Subscription Agreement and the Plan.

         2. I elect to have Contributions in the amount of   % of my
Compensation, as those terms are defined in the Plan,  applied to this purchase.
I understand that  this  amount  must  not be  less  than  1% and  not  more
than  10% of my Compensation  during  the  Offering  Period.  (Please  note
that no  fractional percentages are permitted.)

         3. I hereby authorize payroll  deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription  Agreement.  I
understand  that all  payroll  deductions  made by me shall  be  credited  to my
account under the Plan and that I may not make any additional payments into such
account.  I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable  purchase price  determined
in accordance with the Plan. I further  understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Exercise
Date of the Offering Period unless I otherwise  withdraw from the Plan by giving
written notice to the Company for such purpose.

         4. I  understand  that I  may  discontinue  at any  time  prior  to the
Exercise  Date my  participation  in the Plan as provided in paragraph 10 of the
Plan. I also  understand  that on one occasion only during the Offering Period I
may increase or decrease the rate of my Contributions during the Offering Period
by  completing  and filing with the Company a new  Subscription  Agreement.  The
change in rate shall be  effective as of the  beginning of the calendar  quarter
following the date of filing of the new Subscription Agreement.

         5. I have received a copy of the Company's  most recent  description of
the  Plan and a copy of the  complete  "Silver  Diner Inc.  199  Stock  Purchase
Plan." I understand that my participation in the Plan is in all respects subject
to the terms of the Plan.

         6. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):



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

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


         7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan.


 NAME:  (Please print)    ______________________________________________________
                            (First)           (Middle)         (Last)

----------------------    ------------------------------------------------------
 (Relationship)                                       (Address)


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



         8. I understand that if I dispose of any shares received by me pursuant
to the Plan within two (2) years after the  Offering  Date (the first day of the
Offering  Period  during  which I purchased  such shares) or within one (1) year
after the date of the end of the Offering  Period, I will be treated for federal
income tax purposes as having received ordinary  compensation income at the time
of such disposition in an amount equal to the excess of the fair market value of
the shares at the time such shares were transferred to me over the price which I
paid for the shares,  regardless  of whether I disposed of the shares at a price
less than their fair market  value at  transfer.  The  remainder  of the gain or
loss, if any,  recognized on such disposition will be treated as capital gain or
loss.

                  I hereby agree to notify the Company in writing  within thirty
(30) days  after  the date of any such  disposition,  and I will  make  adequate
provision for federal, state or other tax withholding obligations, if any, which
arise upon the  disposition  of the Common  Stock.  The Company may, but will be
obligated to,  withhold from my  compensation  the amount  necessary to meet any
applicable  withholding  obligation including any withholding  necessary to make
available to the Company any tax deductions or benefits attributable to the sale
or early disposition of Common Stock by me.

         9. If I dispose of such shares at any time after  expiration of the two
(2) year and one (1) year holding  periods,  I understand that I will be treated
for federal income tax purposes as having received  compensation  income only to
the extent of an amount equal to the lesser of (1) the excess of the fair market
value of the  shares at the time of such  disposition  over the  purchase  price
which I paid for the  shares  under the  option,  or (2) 15% of the fair  market
value of the shares on the Offering  Date. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital gain or loss.


                                     - 2 -

<PAGE>



             I  understand  that this tax  summary is only a summary and is
subject to change.

         10. I hereby agree to be bound by the terms of the Plan.  The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.


SIGNATURE:__________________________________


SOCIAL SECURITY NUMBER:_____________________


DATE:_______________________________________



SPOUSE'S SIGNATURE (necessary if beneficiary
is not spouse):



(Signature)
--------------------------------------------




--------------------------------------------
(Print name)


                                     - 3 -


<PAGE>

                               SILVER DINER, INC.

                       1996 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL


         I,                                      , hereby elect to withdraw my
participation in the Silver Diner Inc. 199  Employee Stock Purchase Plan (the
"Plan") for the Offering Period                   .  This withdrawal covers all
Contributions credited to my account and is effective on the date designated
below.

         I understand that all Contributions credited to my account will be paid
to me within ten (10)  business days of receipt by the Company of this Notice of
Withdrawal  and  that  my  option  for the  current  period  will  automatically
terminate,  and that no further  Contributions for the purchase of shares can be
made by me during the Offering Period.

         The undersigned  further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.

         If the  undersigned  is an officer,  director  of Silver  Diner Inc. or
other person subject to Section 16 of the  Securities  Exchange Act of 1934, the
undersigned  further  understands  that  under  rules  promulgated  by the  U.S.
Securities and Exchange Commission he or she may not re-enroll in the Plan for a
period of six (6) months after withdrawal.


Dated:
      ----------------------------                ------------------------------
                                                  Signature of Employee


                                                  ------------------------------
                                                  Social Security Number