Document:

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                                                                 EXHIBIT 10.20.9

                               SILVER DINER INC.

                      1996 EMPLOYEE STOCK PURCHASE PLAN,
                                  AS AMENDED

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

     1.  Purpose.  The purpose of the Plan is to provide employees of the
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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 "Code").  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.  This Plan
document is intended to serve as a restatement of the original version of the
Plan approved by the shareholders of the Company in 1997.

     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, $0.01 par value, of
the Company.

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

          (e) "Compensation" shall mean all remuneration received for services
including regular base salary, imputed tip income, payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses, commissions and
other non-base salary 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.
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          (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.

          (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 which occurs on
or immediately following January 1, April 1, July 1, and October 1 of each
calendar year.

          (m) "Offering Period" shall mean a period of three (3) months
constituting each quarter of the calendar year.  The initial Offering Period
under the Plan shall be October 1, 1998.

          (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.
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          (a) Any person who has been continuously employed as an Employee for
six (6) months as of the Offering Date of a given Offering Period shall be
eligible to participate in such Offering Period under the Plan, 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) 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

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($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 the first business
day of each quarter of each calendar year (or at such other time or times as may
be determined by the Board).  The Plan shall continue until terminated in
accordance with paragraph 19 hereof.  The Board 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
notifying the Company's Office of Human Resources, prior to the applicable
Offering Date pursuant to such notification procedures as the Board may
establish, from time to time.  Such notification procedures shall require the
participant to specify 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 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; 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, by completing and filing with the Company a new
subscription agreement within the ten (10) day period immediately preceding the
beginning of any payroll period during the Offering Period.  The discontinuance
shall be effective as of the beginning of the payroll period following the date
of filing of the new subscription agreement.  A participant who discontinues
participation in the Plan with respect to an Offering Period may not re-enroll
in the Plan prior to the second Offering Period commencing after the effective
date of such discontinuance.

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          (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.
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          (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 (i) the difference between
$25,000 minus the fair market value of all Common Stock purchased during any
prior Offering Period occurring within such calendar year (computed as of the
Offering Date of the Offering Period with respect to which such Common Stock was
purchased) by (ii) 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 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.

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     8.  Exercise of Option.  Unless a participant withdraws contributions from
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the Plan during an Offering Period 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
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Offering Period, the Company shall arrange for the credit to the custodial
account established on behalf of each participant pursuant to the provisions of
paragraph 12(c) of the shares purchased upon exercise of the option by the
participant on whose behalf the custodial account has been established.  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
shall be retained in such custodial account of said participant.

     10.  Withdrawal; Termination of Employment.
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          (a) A participant who elects to discontinue participation in the Plan
with respect to an Offering Period may also elect to withdraw all but not less
than all the Contributions credited to his or her account under the Plan with
respect to such Offering Period at any time prior to the Exercise Date of such
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 withdrawal election 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.

          (d) In the event a participant elects to discontinue participation or
is deemed to elect to discontinue participation with respect to an Offering
Period, such participant may not

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re-enroll in the Plan prior to the second Offering Period commencing after the
effective date of such elective or constructive discontinuance.

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

     12.  Stock.
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          (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.  Notwithstanding the above, any stock purchased on behalf of
a participant with respect to an Offering Period will be retained in a custodial
account on behalf of such participant and may not be sold by the participant or
transferred to the direct ownership of the participant prior to the last day of
the Offering Period immediately following the Offering Period with respect to
which such stock was purchased.

          (d)  Any stock purchased on behalf of a participant shall remain in
the above-referenced custodial account for no less than twenty-four months from
the date of its acquisition unless previously sold on behalf of such participant
prior to the twenty-fourth month following the date of its acquisition.

     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

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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/Joint Account.
          ----------------------------------------

          (a) In the event of the death of a participant, the Company shall
deliver such shares and/or cash to the participant's joint account holder, if
any, as designated under paragraph 14(b) or in the absence of any such joint
account holder, 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.

          (b) The participant may, in his/her sole discretion, designate another
individual to serve as a joint account holder on his/her account provided such
designated individual (i) is of legal age and (ii) executes a statement
acknowledging that he/she is a joint account holder and that he/she understands
the restrictions imposed on the joint account.

     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
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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

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Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, 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 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 shall expire on or before September 11, 2006.
          ------------
The Plan may be amended or terminated by the Board pursuant to paragraph 19, as
provided above.

     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 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.

                                      -9-<PAGE>

                                                                EXHIBIT 10.20.10

                              SILVER DINER, INC.

                 1996 Non-Employee Director Stock Option Plan
                 (as amended March 4, 1998 and March 18, 1999)

     WHEREAS, the 1996 Non-Employee Director Stock Option Plan was approved by
the Board of Directors of Silver Diner, Inc.  (the "Company") on May 29, 1996,
subject to approval by the stockholders at the annual meeting of stockholders to
be held on June 11, 1997, which stockholder approval was subsequently given on
June 11, 1997.

     WHEREAS, Section 6 of the Plan was subsequently amended by the Board of
Directors on March 4, 1998 so as to increase the number of shares of Common
Stock reserved for issuance under the Plan from 75,000 to 150,000, which
amendment was approved by the stockholders at the annual meeting of stockholders
held on June 10, 1998.

     WHEREAS, as originally adopted, subsections (a) and (c) of Section 7 of the
Plan provided for the quarterly issuance of options for 1,000 shares of Common
Stock to each Non-Employee Director, which options vested on and expired three
years after their date of grant.

     WHEREAS, the Board of Directors amended subsections (a) and (c) of Section
7 of the Plan on March 18, 1999, subject to stockholder approval, so as to grant
an option for 4,000 shares to each Non-Employee Director immediately following
each annual stockholder meeting, with the options to (i)  vest 100% one year
following the date of grant, and (ii) expire ten years from the date of grant.

     WHEREAS, the foregoing amendment to the Plan as approved by the Board of
Directors on March 18, 1999, was subsequently approved by the stockholders at
the annual meeting of stockholders held on June 18, 1999.

     WHEREAS, options for 91,000 shares of Common Stock had been granted and
were outstanding prior to June 18, 1999.

     NOW, THEREFORE, the Plan hereby is amended and restated as set forth below.

1.  Purpose

     The purpose of the Plan is to provide an investment opportunity to the
Company's Non-employee Directors by granting them Options to purchase shares of
Common Stock as compensation for their service on the Board.

2.  Definitions

     As used in this Plan, the following words and phrases shall have the
meanings indicated:

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

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

     (c) "Common Stock" shall mean the shares of common stock, $.00074 par
value, of the Company.

     (d) "Company" shall mean Silver Diner, Inc., and its Subsidiaries.

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

     (f) "Fair Market Value" shall mean the closing price of a share of the
Common Stock as reported on the Nasdaq National Market System, or (ii) if the
shares of such Common Stock are not then listed on the Nasdaq National Market
System, the closing price per share of the Common Stock on the principal
national securities exchange, if any, on which the shares of Common Stock shall
then be listed, or (iii) if the shares of such Common Stock are not then listed
on a national securities exchange, the closing price per share of Common Stock
entered on a national inter-dealer quotation system, or (iv) if no closing or
last sales price per share of Common Stock is entered on a national inter-dealer
quotation system, the average of the closing bid and asked prices for the shares
of such Common Stock in the over-the-counter market, or (v) if no price can be
determined under the preceding alternatives, then the price per share as most
recently determined by the Board, which shall, if the price is not determined
under any one of the preceding alternatives, make such determination of the Fair
Market Value at least once each month.

     (g) "Form S-8 Registration Statement" shall mean a registration statement
filed on Form S-8 with and declared effective by the Securities and Exchange
Commission under the Securities Act covering the offer and sale of the Options
and the underlying Common Stock.

     (h) "Non-employee Director" shall mean any member of the Company's Board
who is a "Non-Employee Director" as such term is defined under Rule 16b-
3(b)(3)(i) promulgated under the Exchange Act.

     (i) "Option" shall mean any option issued pursuant to this Plan.

     (j) "Optionee" shall mean any person to whom an Option is granted under
this Plan.

     (k) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of
granting an Option or the sale of any Common Stock, each of the corporations
other than the Company owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

     (l) "Plan" shall mean this 1996 Non-employee Director Stock Option Plan.

     (m) "Reorganization" shall mean any merger, reorganization,
consolidation or sale of all or substantially all of the Company's assets.

     (n) "Registered" shall mean a Form S-8 Registration Statement shall be in
effect covering the purchase of the Options or the underlying shares.

     (o) "Securities Act" shall mean the Securities Act of 1933, as amended.

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<PAGE>

     (p) "Stock Option Agreement" shall mean the agreement evidencing  the
Options sold to Optionees pursuant to the Plan containing the terms  and
conditions specified in Section 7 below and on the form attached hereto as
Exhibit A.

     (q) "Subsidiary" shall mean any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting an Option, each of the corporations, other Than the last corporation in
the unbroken chain owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

3.  General Administration

     The Plan shall be administered by a committee (the "Committee"), consisting
of not less than two Non-employee Directors. The Committee shall have the
authority in its discretion to administer the Plan and to interpret the Plan and
to prescribe, amend and rescind rules and regulations relating to the operation
of the Plan and to make all other determinations deemed necessary or advisable
for the administration of the Plan; provided, however, that the Committee may
not alter, amend or modify the express provisions of the Plan. The Board shall
fill all vacancies, however caused, in the Committee. The Board may from time to
time appoint additional members to the Committee, and may at any time remove one
or more Committee members and substitute others. No member of the Board or the
Committee shall be liable for any action taken or determination made in good
faith with respect to the Plan or any action taken thereunder.

4.  Term of Plan

     The Plan became effective upon its adoption by the Company's Board on
September 11, 1996, subject to stockholder approval, and shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 10
hereof. Any Options outstanding under the Plan on such date shall continue to be
exercisable pursuant to their terms, except as provided by Section 7(f) hereof.

5.  Eligibility

     Options may be granted to any Non-employee Director of the Company as
compensation for service on the Board.

6.  Stock Subject to the Plan

     An aggregate of 150,000 shares of Common Stock shall be reserved for
issuance pursuant to Options issued pursuant to the Plan. If any outstanding
Option under the Plan for any reason expires or is terminated without having
been exercised in full, the shares of Common Stock allocable to the unexercised
portion of such Option shall (unless the Plan shall have been terminated) become
available for subsequent issuance of Options under the Plan.

                                      -3-
<PAGE>

7.  Terms and Conditions of Options

     Each Option issued pursuant to the Plan shall be evidenced by a Stock
Option Agreement containing the terms and conditions specified in this
Section 7.

     (a) Grant of Options. Each Non-employee Director shall be granted an Option
to purchase 4,000 shares of Common Stock immediately following each annual
stockholder meeting commencing with the stockholder meeting held on June 18,
1999.

     (b)  Option Exercise Price. The exercise price of each Option (the "Option
Exercise Price") shall equal the Fair Market Value of the Common Stock on the
day immediately preceding the date of grant of each Option. The Option Exercise
Price shall be subject to adjustment as provided in Section 7(f) hereof.

     (c)  Term and Exercise of Options. Options shall be exercisable in whole or
in part at any time over the exercise period commencing one year after the date
of grant, but in no event shall such period exceed ten years from the date of
the grant of each such Option. The exercise period shall be subject to earlier
termination as provided in Section 7(f) below. An Option may be exercised by
giving prior written notice of such exercise to the Company and by paying the
Option Exercise Price to the Company either by delivering on the date of
exercise (i) a check in the amount of the Option Exercise Price, (ii) Common
Stock having a Fair Market Value on the day immediately preceding the date of
exercise equal to or less than the Option Exercise Price, or (iii) a combination
thereof. If the Optionee tenders shares of Common Stock having a Fair Market
Value which exceeds the Option Exercise Price, the Company shall return to the
Optionee any and all whole shares of Common Stock which exceed the Option
Exercise Price and the Company shall pay the Optionee any additional amount
which exceeds the Option Exercise Price in cash in lieu of issuing the Optionee
a fractional share for such amount.

     (d)  Vesting and Restrictions on Transferability. Options issued under the
Plan shall vest  immediately  upon grant and shall not be transferable other
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act ("ERISA") or the rules thereunder.

     (e)  Death or Disability of Optionee. If an Optionee shall die or become
disabled, all Options theretofore issued to such Optionee may, unless earlier
terminated in accordance with their terms, be exercised at any time during the
term of the Option by the personal representative of the Optionee or by the
person who acquired the right to exercise such Option by bequest or inheritance
or otherwise by reason of the death or disability of the Optionee.

     (f)  Reclassification; Recapitalization; and Reorganizations.

          (1)  Dividends and Stock Splits. If there is any change in the number
of shares of Common Stock through the declaration of stock dividends,
recapitalization resulting in stock splits, or combinations or exchanges of such
shares, then the number of shares of Common Stock available for Options, the
number of such shares covered by outstanding Options and the Option Exercise
Price shall be proportionately adjusted to reflect any increase or decrease in
the

                                      -4-
<PAGE>

number of issued shares of Common Stock; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.

     (2) Spin-Offs and Liquidations. In the event of the proposed dissolution or
liquidation of the Company, or in the event of any corporate separation or
division, including, but not limited to, a split-up, a split-off or spin-off,
each Option granted under the Plan shall terminate as of a date to be fixed by
the Board, provided, however, that no less than thirty (30) days' written notice
of the date so fixed shall be given to each Optionee, who shall have the right
during the period of thirty (30) days preceding such termination, to exercise
the Options as to all or any part of the shares of Common Stock covered thereby.

     (3)  Reorganizations. If, while unexercised Options remain outstanding
under the Plan, the Company executes a definitive Reorganization agreement, the
Committee may provide that each Option granted under the Plan shall (i)
terminate as of a date to be fixed by the Board, provided, however, that no less
than thirty (30) days' written notice of the date so fixed shall be given to
each Optionee, who shall have the right, during the period of thirty (30) days
preceding such termination, to exercise the Options as to all or any part of the
shares of Common Stock covered thereby or (ii) remain outstanding and be
adjusted so that on exercise the Optionee shall receive the securities, cash or
property that would have been issued with respect to the shares of Common Stock
had the Option been exercised  immediately prior to the Reorganization.  The
Committee may also, in its discretion, permit the cancellation of outstanding
Options in exchange for a cash payment to the Optionee equal to the difference
between the exercise price of the Option and the value of the consideration that
would have been paid had the Option been exercised immediately prior to the
Reorganization.

     (4) Exemptions. Section  7(f)  shall  not apply to a Reorganization in
which the Company is the  surviving corporation and shares of Common Stock are
not converted into or exchanged for stock, securities of any other corporation,
cash or any other thing of value.  Notwithstanding the preceding sentence, in
case of any Reorganization in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from par value to no par value, or as a result of
a subdivision or combination, but including any changes in such shares into two
or more classes series of shares), the Committee may provide that the holder of
each Option then exercisable shall have the right to exercise such Option solely
for the kind and amount of shares of stock and other securities (including those
of any new direct or indirect Parent of the Company), property, cash or any
combination thereof receivable by the holder of the number of shares of Common
Stock for which such Option might have been exercised upon such Reorganization
or reclassification. In the event of a change in the Common Stock as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan. Except as herein expressly
provided, the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, or Reorganization, and
any assurance by the Company of shares of stock of any class, or securities
convertible into shares of  stock of any class, and no adjustment by reason
thereof shall be made with respect to the number of shares of Common Stock
subject to an Option or to the Option Price. The grant of

                                      -5-
<PAGE>

an Option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, Reorganizations or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.

8.   Rights as a Shareholder

     No Optionee shall have any rights as a shareholder with respect to any
shares until the stock certificate evidencing such shares has been issued
evidencing such shares. No adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 7(f) hereof.

9.   General Restrictions

     (a) Investment Representations. The Company may require an Optionee to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock for his or her own account
for investment and not with any present intention of selling or otherwise
distributing the same, and to such other effect as the Company deems necessary
or appropriate in order to comply with applicable federal and applicable state
securities laws.

     (b) Compliance with Securities Laws. Each Option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject thereto on any
securities exchange or any state or federal law, or the consent or approval of
any governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance of Options, such Options may not be sold or
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Board. The Company plans to register the shares
subject to the Options on a Form S-8 Registration Statement. However, nothing
herein shall be deemed to require the Company to obtain an effective Form S-8
Registration Statement or to apply for or to obtain any listing, registration or
qualification of the Options or Common Stock to be issued pursuant thereto.

10.  Amendment and Termination of the Plan

     The Board may at any time and from time to time suspend, terminate, modify
or amend the Plan, provided that no suspension, termination, modification or
amendment of the Plan may adversely affect any rights under the Plan unless the
written consent of those affected is obtained.

                                      -6-
<PAGE>

                               SILVER DINER, INC.
                             Stock Option Agreement
                                    for the
                  1996 Non-employee Director Stock Option Plan

     A stock option award (the "Stock Option" or "Award") is hereby granted by
Silver Diner, Inc., (the "Company"), to the Non-employee Director named below
("Optionee"), for and with respect to common stock of the Company, par value
$.00074 per share ("Common Stock"), subject to the following terms and
conditions:

     1.  Subject to the provisions set forth herein and the provisions of the
1996 Non-employee Director Stock Option Plan (the "Plan"), the provisions of
which are hereby incorporated by reference, and in consideration of the
agreements of Optionee provided in this Stock Option Agreement (the "Option
Agreement"), the Company hereby grants to Optionee a Stock Option to purchase
from the Company the number of shares of Common Stock, at the exercise price and
on the schedule, all as set forth below.

Name of Optionee:

Date of Grant:

Option Exercise Price:

Number of Shares of Common
Stock Subject to Stock Option:

Expiration Date:

     2.  Written notice of an election to exercise any portion of the Award
specifying the portion thereof being exercised and the exercise date, shall be
given by Optionee, or his legal representative, (a) by delivering such notice at
the principal executive offices of the Company no later than the exercise date,
or (b) by mailing such notice, postage prepaid, addressed to the Secretary of
the Company at the Company's principal executive offices at least three business
days prior to the exercise date.

     3.  Neither Optionee nor any other person entitled to exercise the Stock
Option under the terms hereof shall be, or have any of the rights or privileges
of, a shareholder of the Company in respect of any Common Stock issuable on
exercise of the Stock Option, until the date of the issuance of a stock
certificate for such Common Stock.

     4.  If the Award shall be exercised in whole, this Option Agreement shall
be surrendered to the Company for cancellation. If the Award shall be exercised
in part, or a change in the number or designation of the Common Stock shall be
made, this Option Agreement shall be delivered to the Company for the purpose of
making appropriate notation thereon, or of otherwise reflecting, in such manner
as the Company shall determine, the partial exercise or the change in the number
or designation of the Common Stock.
<PAGE>

     5.  The grant of the Award hereunder shall not be deemed to give the
Optionee the right to be retained as a Non-employee Director of the Company or
to affect the right of the Company to discharge the Optionee at any time.

     6.  The Award shall be exercised in accordance with such administrative
regulations as the Board shall from time to time adopt.

     7.  The Award and this Option Agreement shall be construed, administered
and governed in all respects under and by the laws of the State of Delaware,
without giving effect to principles of conflict of laws.

     8.  The Award and this Option Agreement are subject to the requirement that
the shareholders of the Company approve and ratify the adoption of the Plan no
later than __________________, 199_.

                                            SILVER DINER, INC.

                                            By:
                                                 --------------------------
                                                 Name:
                                                 Title:

                                      -2-

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