Document:

<PAGE>

                                                                    Exhibit 10.2

December 19, 2001

Mr. Patrick Meskell
Silver Diner, Inc.
11806 Rockville Pike
Rockville, Maryland 20852

Re:  Silver Diner Stock Options
     --------------------------

Dear Mr. Meskell:

         You are the holder of options (the "Existing Stock Options") to
purchase shares of common stock of Silver Diner, Inc. (the "Company") as set
forth in Exhibit A attached hereto. The exercise price or prices of your
Existing Stock Options are higher than the current market value of the Company's
common stock. To address this issue, the Company and you have agreed to the
following:

         1. You will surrender those of your Existing Stock Options as you shall
indicate by writing "yes" in the box(es) provided in the right hand column of
the table on Exhibit A attached hereto.

         2. In exchange for such cancellation, the Company agrees to grant to
you, on July 31, 2002, provided you are then associated with the Company, new
options to purchase the Company's common stock (the "New Stock Options"). The
New Stock Options will (i) be for the same number of shares of stock as Existing
Stock Options that you surrender for cancellation, (ii) vest on the same dates
as the Existing Stock Options that you surrender for cancellation, (iii) be
exercisable at a price equal to market value of the Company's common stock on
July 31, 2002.

         3. In addition, you shall have the right at any time prior to July 31,
2002, to elect to delay until February 1, 2003 issuance of a portion of the New
Stock Options so as to comply with the $100,000 federal tax requirement referred
to on Exhibit A hereto for incentive stock options.

         I am pleased that the Company has been able to work out this
arrangement with you. Please sign below to confirm our agreement.

                                           Sincerely,

                                           /s/ Robert T. Giaimo
                                           -----------------------------------
                                           Robert T. Giaimo, President

                                      -11-

<PAGE>

         The undersigned hereby agrees that the Existing Stock Options held by
the undersigned, as indicated on Exhibit A by the undersigned, are hereby
surrendered for cancellation.

         The undersigned further agrees to accept the New Stock Options to be
granted on July 31, 2002, and to be bound by the terms of the New Stock Option
Agreement which the Company will sign and deliver to you promptly after July 31,
2002. The New Stock Option Agreement will be in the form attached hereto as
Exhibit B, with the blanks filled in for the date, the number of shares covered,
the exercise price, and the exercise dates.

         Please sign below and complete Exhibit A and return this letter
together with Exhibit A to Mr. Noland Montgomery via fax at 202-857-6395, with
the original to follow by mail to the address below, on or before December 28,
2001:

         Mr. Noland Montgomery
         C/o Arent Fox
         1050 Connecticut Avenue, N.W.
         Washington, D.C.  20036-5339

/s/ Patrick Meskell
-------------------------------

                                      -12-

<PAGE>

                                                                       Exhibit A
                                                                       ---------
<TABLE>
<CAPTION>

                                 Patrick Meskell
-----------------------------------------------------------------------------------------------------------------------
                                                                                                      Write "yes" or
         Shares                                                                                       "no" in each
       subject to                                                                                     box to indicate
         option                                                                                       whether you
    (all options are                                                                                  wish to cancel
     incentive stock         Exercise             Vesting                              Expiration     the options
       options)(*)            Price              Schedule            Grant Date           Date        indicated
-----------------------------------------------------------------------------------------------------------------------
1996 Stock Option Plan

-----------------------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>                       <C>              <C>               <C>
100,000                       $1.125         10,000 (10%) vested at    12/29/97         12/28/07          YES
                                             12/29/97, 20% to vest
                                             at 12/29/98, 20% at
                                             12/29/99, 20% at
                                             12/29/00 and 30% at
                                             12/29/01 /1/
-----------------------------------------------------------------------------------------------------------------------
55,000                        $0.625         100% at 12/31/05 /2/      12/15/98         12/14/08          YES
-----------------------------------------------------------------------------------------------------------------------
200,000                       $1.00          20% to vest at            12/08/99         12/07/09          YES
                                             1/1/2000, 20% at
                                             1/1/2001,  20% at
                                             1/1/2002, 20% at
                                             1/1/2003 and  20% at
                                             1/1/2004
-----------------------------------------------------------------------------------------------------------------------
   Second Amended and
   Restated 1991 Stock
       Option Plan
-----------------------------------------------------------------------------------------------------------------------
75,012.75 (**)                $4.05          Fully vested              12/31/95         12/30/05          YES
-----------------------------------------------------------------------------------------------------------------------
TOTAL ALL OPTIONS:

430,012
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) To qualify as incentive stock options, the aggregate exercise prices of the
options that first become exercisable in any one calendar year may not exceed
$100,000, with any additional options being deemed non-qualifying options. Thus,
a market price of more than $.29 will result in a portion of the options being
deemed non-qualified. The exact number of non-qualified options will equal the
market price of the shares times 430,012 less $100,000 divided by the market
price at July 31, 2001. Does not include option for 25,004 shares granted under
the Second Amended and Restated Earned Ownership Plan which are exercisable at
$.0003 per share.

(**) New options would be issued under the 1996 Stock Option Plan.

-----------------------------
/1/ An additional 18% of options vest when the market price of the shares is
    greater than $5.00 per share, $7.50 per share and $10 per share, with the
    options vesting 100% when the market price is greater than $12.00 per share.
    Note that vesting schedule has been adjusted to incorporate revisions
    adopted by the Board of Directors at its meeting held 12/15/98.

/2/ Option vests earlier if certain performance goals are met, as set forth in
    Stock Option Plan Agreement.

                                      -13-

<PAGE>

                                                                       Exhibit B

          (Exhibit B omitted from this Exhibit -- see Exhibit B to Exhibit 10.1
for form of Stock Option Plan Agreement)

                                      -14-<PAGE>

                                                                    Exhibit 10.3

December 19, 2001

Mr. Ype Von Hengst
Silver Diner, Inc.
11806 Rockville Pike
Rockville, Maryland 20852

Re:  Silver Diner Stock Options
     --------------------------

Dear Mr. Von Hengst:

         You are the holder of options (the "Existing Stock Options") to
purchase shares of common stock of Silver Diner, Inc. (the "Company") as set
forth in Exhibit A attached hereto. The exercise price or prices of your
Existing Stock Options are higher than the current market value of the Company's
common stock. To address this issue, the Company and you have agreed to the
following:

         1. You will surrender those of your Existing Stock Options as you shall
indicate by writing "yes" in the box(es) provided in the right hand column of
the table on Exhibit A attached hereto.

         2. In exchange for such cancellation, the Company agrees to grant to
you, on July 31, 2002, provided you are then associated with the Company, new
options to purchase the Company's common stock (the "New Stock Options"). The
New Stock Options will (i) be for the same number of shares of stock as Existing
Stock Options that you surrender for cancellation, (ii) vest on the same dates
as the Existing Stock Options that you surrender for cancellation, (iii) be
exercisable at a price equal to market value of the Company's common stock on
July 31, 2002.

         3. In addition, you shall have the right at any time prior to July 31,
2002, to elect to delay until February 1, 2003 issuance of a portion of the New
Stock Options so as to comply with the $100,000 federal tax requirement referred
to on Exhibit A hereto for incentive stock options.

         I am pleased that the Company has been able to work out this
arrangement with you. Please sign below to confirm our agreement.

                                           Sincerely,

                                           /s/ Robert T. Giaimo
                                           -----------------------------------
                                           Robert T. Giaimo, President

                                      -15-

<PAGE>

         The undersigned hereby agrees that the Existing Stock Options held by
the undersigned, as indicated on Exhibit A by the undersigned, are hereby
surrendered for cancellation.

         The undersigned further agrees to accept the New Stock Options to be
granted on July 31, 2002, and to be bound by the terms of the New Stock Option
Agreement which the Company will sign and deliver to you promptly after July 31,
2002. The New Stock Option Agreement will be in the form attached hereto as
Exhibit B, with the blanks filled in for the date, the number of shares covered,
the exercise price, and the exercise dates.

         Please sign below and complete Exhibit A and return this letter
together with Exhibit A to Mr. Noland Montgomery via fax at 202-857-6395, with
the original to follow by mail to the address below, on or before December 28,
2001:

         Mr. Noland Montgomery
         C/o Arent Fox
         1050 Connecticut Avenue, N.W.
         Washington, D.C.  20036-5339

/s/ Ype Von Hengst
--------------------------------

                                      -16-

<PAGE>

                                                                       Exhibit A
                                                                       ---------

                                 Ype Von Hengst

                             1996 Stock Option Plan
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                                      Write "yes" or
         Shares                                                                                       "no" in each
       subject to                                                                                     box to indicate
         option                                                                                       whether you
    (all options are                                                                                  wish to cancel
     incentive stock         Exercise             Vesting                           Expiration        the options
       options)(*)             Price             Schedule          Grant Date         Date            indicated
-----------------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>                      <C>             <C>              <C>

150,000                    $1.125         15,000 (10%) vested       12/29/97         12/28/07          YES
                                          at 12/29/97, 20% to
                                          vest at 12/29/98, 20%
                                          at 12/29/99, 20% at
                                          12/29/00 and 30% at
                                          12/29/01 /1/
-----------------------------------------------------------------------------------------------------------------------

55,000                     $0.625         100% at 12/31/05 /2/      12/15/98         12/14/08          YES

-----------------------------------------------------------------------------------------------------------------------
150,000                    $1.00          20% to vest at            12/08/99         12/07/09          YES
                                          1/1/2000, 20% at
                                          1/1/2001, 20% at
                                          1/1/2002, 20% at
                                          1/1/2003 and 20% at
                                          1/1/2004
-----------------------------------------------------------------------------------------------------------------------
TOTAL ALL OPTIONS:
355,000

-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) To qualify as incentive stock options, the aggregate exercise prices of the
options that first become exercisable in any one calendar year may not exceed
$100,000, with any additional options being deemed non-qualifying options. Thus,
a market price of more than $.34 will result in a portion of the options being
deemed non-qualified. The exact number of non-qualified options will equal the
market price of the shares times 355,000 less $100,000 divided by the market
price at July 31, 2001.

-----------------------------
/1/ An additional 18% of options vest when the market price of the shares is
    greater than $5.00 per share, $7.50 per share and $10 per share, with the
    options vesting 100% when the market price is greater than $12.00 per share.
    Note that vesting schedule has been adjusted to incorporate revisions
    adopted by the Board of Directors at its meeting held 12/15/98.

/2/ Option vests earlier if certain performance goals are met, as set forth in
    Stock Option Plan Agreement.

                                      -17-

<PAGE>

                                                                       Exhibit B

      (Exhibit B omitted from this Exhibit -- see Exhibit B to Exhibit 10.1
for form of Stock Option Plan Agreement)

                                      -18-

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