Document:

<PAGE>

                                                                 Exhibit 10.25.1

                           [SILVER DINER LETTERHEAD]

                                 March 4, 1999

Mr. Craig Kendall
Silver Diner, Inc.
11806 Rockville Pike
Rockville, MD 20852

Dear Craig:

I am pleased to set forth in this letter your employment terms and compensation.
This letter takes the place of all prior oral and written agreements and
understandings with respect to your employment terms and compensation.

The specifics of our understanding are as follows:

1.  Salary - A base salary of $125,000 per annum, with annual adjustments in the
    future as approved by the Company's Compensation Committee or by the Board
    of Directors.

2.  Bonus and Stock Options - You will be entitled to participate in bonus and
    stock option plans as made available by the Company to its executives.

3.  Automobile - You will receive a $500.00 per month car allowance.

4.  Life Insurance - The Company will provide, at no cost to you, life insurance
    coverage in the amount of $500,000.00.

5.  Health/Dental Insurance - The Company will provide, at no cost to you and
    your family, group health and dental plans offered by the Company's
    employees generally.

6.  Disability Coverage - The Company will provide, at no cost to you, long term
    disability insurance coverage in an amount of approximately 60% of your base
    salary per month, with a 90 day waiting period during which time your base
    salary will continue to be paid by the Company.

7.  Vacation Days - Three weeks per year. Vacation does not accrue or carry over
    from one year to the next year.

8.  Sick Leave and Other Benefits - You will be entitled to sick leave and other
    benefits in accordance with the Company's policies for its executives.

                   11806 ROCKVILLE PIKE, ROCKVILLE, MD 20852
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DINER 301-770-4166        EXECUTIVE OFFICE 301-770-0333         FAX 301-770-2832
<PAGE>

Mr. Craig Kendall
March 4, 1999
Page 2

9.   Compensation Coverage - If the Company terminates your employment for any
     reason, you will be paid all base salary earned by you and unpaid on the
     date of termination, plus three months base salary. If you resign, you will
     be paid all base salary earned by you and unpaid on the date of
     resignation, plus three months base salary, payable after resignation on
     the same schedule as your salary was paid before resignation, provided you
     have given the Company at least three months prior notice of your proposed
     resignation as an employee of the Company. If you resign as an employee of
     the Company and do not give at least three months prior notice, (a) all
     stock options to purchase stock of the Company and all common stock
     purchase rights granted to you by the Company subsequent to March 1, 1999,
     and all stock options granted to you on December 15, 1998, pursuant to
     the Plan known as the "Active Employee/Consultant Stock Option Plan" will
     be terminated on the date of your resignation and may not thereafter be
     exercised and (b) you will sell and the Company will purchase all common
     stock of the Company acquired by you pursuant to stock options or stock
     purchase rights within six (6) months prior to the date of such resignation
     at a purchase price equal to the price you paid for such common stock. All
     certificates for common stock of the Company acquired by you pursuant to
     the exercise of stock options or stock purchase rights will bear a legend
     describing the foregoing.

10.  Confidentiality and Non-Competition - You will enter into Confidentiality
     and Non-Competition Agreements that all of the general managers have
     entered into in the form attached hereto as Exhibit A.

I am excited about our progress.

Sincerely,

SILVER DINER, INC.

by: /s/ Robert T. Giaimo
    -------------------------
        Robert T. Giaimo
        President

AGREED AND ACCEPTED:

/s/ Craig A. Kendall                                       Date: 3/17/99
-----------------------------                                    --------------
Craig A. Kendall
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

            [Form of Confidentiality and Non-Competition Agreement]

     1.  Confidential Information.

     Employee agrees that all Confidential Information (as defined below)
relating to Silver Diner, Inc., 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 of employment 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 1, 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.

     2.  Non-Competition.

     Employee 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 of employment:

          (i)   Employee will not engage, without first obtaining Silver Diner,
Inc.'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 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.
<PAGE>

          (ii)  Employee will not engage, without first obtaining Silver Diner,
Inc.'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.

          (iii) Employee will not induce or attempt to persuade any employee of
Silver Diner, Inc. to terminate his or her employment relationship in order to
enter into employment which is competitive with Silver Diner, Inc.

          (iv)  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 2, any term, 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.<PAGE>

                                                                 Exhibit 10.25.2

                           [SILVER DINER LETTERHEAD]

                                 March 4, 1999

Mr. Timothy Cusick
Silver Diner, Inc.
11806 Rockville Pike
Rockville, MD 20852

Dear Tim:

I am pleased to set forth in this letter your employment terms and compensation.
This letter takes the place of all prior oral and written agreements and
understandings with respect to your employment terms and compensation.

The specifics of our understanding are as follows:

1.   Salary - A base salary of $104,000 per annum, with annual adjustments in
     the future as approved by the Company's Compensation Committee or by the
     Board of Directors.

2.   Bonus and Stock Options - You will be entitled to participate in bonus and
     stock option plans as made available by the Company to its executives.

3.   Automobile - You will receive a $500.00 per month car allowance.

4.   Life Insurance - The Company will provide, at no cost to you, life
     insurance coverage in the amount of $500,000.00.

5.   Health/Dental Insurance - The Company will provide, at no cost to you and
     your family, group health and dental plans offered by the Company's
     employees generally.

6.   Disability Coverage - The Company will provide, at no cost to you, long
     term disability insurance coverage in an amount of approximately 60% of
     your base salary per month, with a 90 day waiting period during which time
     your base salary will continue to be paid by the Company.

7.   Vacation Days - Three weeks per year. Vacation does not accrue or carry
     over from one year to the next year.

8.   Sick Leave and Other Benefits - You will be entitled to sick leave and
     other benefits in accordance with the Company's policies for its
     executives.

                   11806 ROCKVILLE PIKE, ROCKVILLE, MD 20852
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DINER 301-770-4166        EXECUTIVE OFFICE 301-770-0333         FAX 301-770-2832
<PAGE>

Mr. Timothy Cusick
March 4, 1999
Page 2

9.   Compensation Coverage - If the Company terminates your employment for any
     reason, you will be paid all base salary earned by you and unpaid on the
     date of termination, plus three months base salary. If you resign, you will
     be paid all base salary earned by you and unpaid on the date of
     resignation, plus three months base salary, payable after resignation on
     the same schedule as your salary was paid before resignation, provided you
     have given the Company at least three months prior notice of your proposed
     resignation as an employee of the Company. If you resign as an employee of
     the Company and do not give at least three months prior notice, (a) all
     stock options to purchase stock of the Company and all common stock
     purchase rights granted to you by the Company subsequent to March 1, 1999,
     and all stock options granted to you on December 29, 1997, and on December
     15, 1998, pursuant to the Plan known as the "Active Employee/Consultant
     Stock Option Plan" will be terminated on the date of your resignation and
     may not thereafter be exercised and (b) you will sell and the Company will
     purchase all common stock of the Company acquired by you pursuant to stock
     options or stock purchase rights within six (6) months prior to the date of
     such resignation at a purchase price equal to the price you paid for such
     common stock. All certificates for common stock of the Company acquired by
     you pursuant to the exercise of stock options or stock purchase rights will
     bear a legend describing the foregoing.

10.  Confidentiality and Non-Competition - You will enter into Confidentiality
     and Non-Competition Agreements that all of the general managers have
     entered into in the form attached hereto as Exhibit A.

I am excited about our progress.

Sincerely,

SILVER DINER, INC.

by: /s/ Robert T. Giaimo
    -------------------------
        Robert T. Giaimo
        President

AGREED AND ACCEPTED:

/s/ Timothy Cusick                                         Date: 3/15/99
-----------------------------                                    --------------
Timothy Cusick
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

            [Form of Confidentiality and Non-Competition Agreement]

     1.   Confidential Information.

     Employee agrees that all Confidential Information (as defined below)
relating to Silver Diner, Inc., 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 of employment 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 1, 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.

     2.   Non-Competition.

     Employee 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 of employment:

          (i)   Employee will not engage, without first obtaining Silver Diner,
Inc.'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 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.
<PAGE>

          (ii)  Employee will not engage, without first obtaining Silver Diner,
Inc.'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.

          (iii) Employee will not induce or attempt to persuade any employee of
Silver Diner, Inc. to terminate his or her employment relationship in order to
enter into employment which is competitive with Silver Diner, Inc.

          (iv)  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 2, any term, 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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]