Document:

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                                  EXHIBIT 10.7

                                    AGREEMENT
                                     BETWEEN
                                   F&M BANCORP
                            HOME FEDERAL SAVINGS BANK
                                       AND
                             RICHARD W. PHOEBUS, SR.

         AGREEMENT, dated as of the 16th day of November 1999, between F&M
Bancorp, a Maryland corporation, Home Federal Savings Bank, a savings bank
(together or separately hereinafter referred to as the "Employers") and Richard
W. Phoebus, Sr.(the "Executive").

WITNESSETH:

         WHEREAS, the Executive is presently an executive officer of the
Employers; and

         WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and

         WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that the Executive's employment
with the Employers is terminated under specified circumstances detailed herein:

         NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:

         1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:

         (a) Average Annual Compensation. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the five consecutive calendar years preceding the Date of
Termination which yield the highest such average. Compensation shall include
base salary and bonuses. Compensation shall not include fringe benefits such as
automobiles or other perquisites, but shall include any pre-tax reduction for
contributions to any tax qualified retirement plan, deferred compensation plan,
or flexible benefits plan.

         (b) Cause. Cause shall mean (i) personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final cease
and desist order, after notice and an opportunity to cure the alleged breach, or
a material breach by the Executive of any agreement on his part made herein.

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         (c) Change-in-Control of the Employers. Change-in-Control shall be
deemed to have occurred if the event set forth in any one of the following
paragraphs shall have occurred relative to either or both of the Employers:

                    (i)  any Person is or becomes the Beneficial Owner, directly
                         or indirectly, of securities of the Employers (not
                         including in the securities beneficially owned by such
                         Person any securities acquired directly from the
                         Employers or their Affiliates) representing 25% or more
                         of the combined voting power of the Employers' then
                         outstanding securities, excluding any Person who
                         becomes such a Beneficial Owner in connection with a
                         transaction described in clause (A) of paragraph (iii)
                         below; or

                    (ii) the following individuals cease for any reason to
                         constitute a majority of the number of directors then
                         serving on the Board; individuals who, on the date
                         hereof, constitute the Board and any new director
                         (other than a director whose initial assumption of
                         office is in connection with an actual or threatened
                         election contest, including but not limited to a
                         consent solicitation, relating to the election of
                         directors of the Employers) whose appointment or
                         election by the Board or nomination for election by the
                         Employers' shareholders was approved or recommended by
                         a vote of at least two-thirds (2/3) of the directors
                         then still in office who either were directors on the
                         date hereof or whose appointment, election or
                         nomination for election was previously so approved or
                         recommended; or

                    (iii) there is consummated a merger or consolidation of the
                         Employers or any direct or indirect subsidiary of the
                         Employers with any other corporation, other than (A) a
                         merger or consolidation which would result in the
                         voting securities of the Employers outstanding
                         immediately prior to such merger or consolidation
                         continuing to represent (either by remaining
                         outstanding or by being converted into voting
                         securities of the surviving entity or any parent
                         thereof), in combination with the ownership of any
                         trustee or other fiduciary holding securities under an
                         employee benefit plan of the Employers or any
                         subsidiary of the Employers, at least 60% of the
                         combined voting power of the securities of the
                         Employers or such surviving entity or any parent
                         thereof outstanding immediately after such merger or
                         consolidation, or (B) a merger or consolidation
                         effected to implement a recapitalization of the
                         Employers (or similar transaction) in which no Person
                         is or becomes the Beneficial Owner, directly or
                         indirectly, of securities of the Employers (not
                         including in the securities Beneficially Owned by such
                         Person any securities acquired directly from the
                         Employers or their Affiliates) representing 25% or more
                         of the combined voting power of the Employers' then
                         outstanding securities.

                    (iv) the shareholders of the Employers approve a plan of
                         complete liquidation or dissolution of the Employers or
                         there is consummated an agreement for the sale or
                         disposition by the Employers of all or substantially
                         all of the

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                         Employers' assets, other than a sale or disposition by
                         the Employers of all or substantially all of the
                         Employers' assets to an entity, at least 60% of the
                         combined voting power of the voting securities of which
                         are owned by shareholders of the Employers in
                         substantially the same proportions as their ownership
                         of the Employers immediately prior to such sale;

                    (v)  the Employers ceases to own, directly or indirectly,
                         securities of any subsidiary representing 50% or more
                         of the combined voting power of the subsidiary's then
                         outstanding securities; or

                    (vi) there is consummated an agreement for the sale or
                         disposition by the Employers of all or substantially
                         all of a subsidiary's assets, other than a sale or
                         disposition by the Employers of all or substantially
                         all of the subsidiary's assets to an entity, at least
                         60% of the combined voting power of the voting
                         securities of which are owned by shareholders of the
                         Employers in substantially the same proportions as
                         their ownership of the subsidiary immediately prior to
                         such sale; provided however, that such a sale or
                         disposition should only be effective for those
                         Executives, if any, employed by the subsidiary whose
                         assets are so sold or otherwise disposed of, and not
                         all participating Executives.

                         "Affiliate" shall have the meaning set forth in Rule
                         12b-2 promulgated under Section 12 of the Exchange
                         Act.

                         "Beneficial Owner" shall have the meaning set forth
                         in Rule 13d-3 under the Exchange Act.

                         "Board" shall mean the boards of directors of
                         either or both of the Employers as applicable.

                         "Exchange Act" shall mean the Securities Exchange
                         Act of 1934, as  amended from time to time.

                         "Person" shall have the meaning given in Section
                         3(a)(9) of the Exchange Act, as modified and used in
                         Sections 13(d) and 14(d) thereof, except that such
                         term shall not include (i) the Employers or any of
                         their subsidiaries, (ii) a trustee or other fiduciary
                         holding securities under an employee benefit plan of
                         the Employers or any of their Affiliates, (iii) an
                         underwriter temporarily holding securities pursuant
                         to an offering of such securities, or (iv) a
                         corporation owned, directly or indirectly, by the
                         shareholders of the Employers in substantially the
                         same proportions as their ownership of stock of the
                         Employers.

         A "Potential Change-in-Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:

         (i)      the Employers enter into an agreement, the consummation of
                  which would result in the occurrence of a Change-in-Control;

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         (ii)     the Employers or any Person publicly announces an intention to
                  take or to consider taking actions which, if consummated,
                  would constitute a Change-in-Control;

         (iii)    any Person becomes the Beneficial Owner, directly or
                  indirectly, of securities of the Employers representing 15% or
                  more of either the then outstanding shares of common stock of
                  the Employers or the combined voting power of the Employers'
                  then outstanding securities (not including in the securities
                  beneficially owned by such Person any securities acquired
                  directly from the Employers or their affiliates); or

         (iv)     the Board adopts a resolution to the effect that a Potential
                  Change-in-Control has occurred.

         (d) CODE. Code shall mean the Internal Revenue Code of 1986, as
amended.

         (e) DATE OF TERMINATION. "Date of Termination" shall mean:

                  (i) if the Executive's employment is terminated for Cause or
for Disability, the date specified in the Notice of Termination, and (ii) if the
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given or as specified in such Notice.

         (f) DISABILITY. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or, if no
such plan applies, which would qualify the Executive for disability benefits
under the Federal Social Security System.

         (g) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive based on:

                  (i) without the Executive's express written consent, the
assignment by the Employers to the Executive of any duties which are materially
inconsistent with the Executive's positions, duties, responsibilities and status
with the Employers immediately prior to a Change-in-Control of the Employers, or
a material change in the Executive's reporting responsibilities, titles or
offices as an employee and as in effect immediately prior to such a
Change-in-Control, or any removal of the Executive from or any failure to
re-elect or re-appoint the Executive to any of such responsibilities, titles or
offices, except in connection with the termination of the Executive's employment
for Cause, Disability or Retirement or as a result of the Executive's death or
by the Executive other than for Good Reason, or assignment by the Employers to
the Executive of duties which cannot effectively be performed at the Employer's
principal offices at Washington or Frederick County, Maryland, (ii) without the
Executive's express written consent, a reduction by the Employers in the
Executive's compensation as in effect on the date of the Change-in-Control of
the Employers or as the same may be increased from time to time thereafter,
(iii) without the Executive's express written consent, a failure by the
Employers to provide the Executive with the same fringe benefits that were
provided to the Executive immediately prior to a Change-in-Control of the
Employers, or with a package of fringe benefits (including paid vacations) that,
though one or more of such benefits may vary from

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those in effect immediately prior to such Change-in-Control, is substantially
comparable in all material respects to such fringe benefits taken as a whole,
(iv) any purported termination of the Executive's employment for Cause or
Disability which is not effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (i) below; or (v) the failure by the Employers to
obtain the assumption of and agreement to perform this Agreement by any
successor as contemplated in Section 6 hereof.

         (h) IRS. IRS shall mean the Internal Revenue Service.

         (i) NOTICE OF TERMINATION. Any purported termination by the Employers
for Cause or Disability or by the Executive for Good Reason shall be
communicated by written "Notice of Termination" to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which:

                  (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, (iii) specifies a Date of
Termination, which shall be not less than thirty (30) nor more than ninety (90)
days after such Notice of Termination is given, except in the case of the
Employers' termination of Executive's employment for Cause, and (iv) is given in
the manner specified in Section 7 hereof.

2.       BENEFITS UPON TERMINATION

         (a)      If the Executive's employment by the Employers shall be
                  terminated subsequent to a Change-in-Control or Potential
                  Change-In-Control of the Employers (i) by the Employers other
                  than for Cause, Disability, or as a result of the Executive's
                  death, or (ii) by the Executive for Good Reason, then the
                  Employers shall, subject to the provisions of Section 3
                  hereof, if applicable, pay to the Executive an amount equal to
                  the sum of 3.0 times the Executive's Average Annual
                  Compensation. Such payment shall be made in thirty-six (36)
                  equal monthly installments, beginning on the first day of the
                  month following the month in which the Executive's employment
                  as terminated.

         (b)      If the Executive's employment by the Employers shall be
                  terminated prior to a Change-in-Control or Potential
                  Change-in-Control of the Employers other than for Cause, the
                  Employers shall pay the Executive an amount equal to one and
                  one-half (1.5) times the Executive's Average Annual
                  Compensation. Such payment shall be made in eighteen (18)
                  equal monthly installments, beginning the first day of the
                  month following the month during which the Executive's
                  employment is terminated.

3.  MITIGATION; EXCLUSIVITY OF BENEFITS.

         (a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.

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         (b)      The specific arrangements referred to herein are not intended
                  to exclude any other benefits which may be available to the
                  Executive upon a termination of employment with the Employers
                  pursuant to employee benefit plans of the Employers or
                  otherwise.

4. COMPETITION; CONFIDENTIAL INFORMATION.

         The Executive and the Employers recognize that due to the nature of his
employment, and his relationship with Employers, the Executive has had and will
have access to, and has acquired and will acquire, and has assisted and will
assist in developing, confidential and proprietary information relating to the
business and operations of Employers and their affiliates, including, without
limiting the generality of the foregoing, information with respect to their
present and prospective services, systems, clients, customers, agents, and sales
and marketing methods. The Executive acknowledges that such information has been
and will be of central importance to Employer's business and that disclosure of
it to or its use by others could cause substantial loss to Employers. The
Executive and Employers also recognize that an important part of the Executive's
duties will be to develop good will for Employers through his personal contact
with clients of Employers and that there is a danger that this good will, a
proprietary asset of Employer's may follow the Executive if and when his
relationship with Employers is terminated. The Executive accordingly agrees as
follows:

              (a)  The Executive agrees that, upon termination of his employment
                   hereunder:

                   (i)     The Executive will not directly or indirectly accept
                           employment within a radius of fifty (50) miles
                           measured from 122-128 West Washington Street,
                           Hagerstown, Md. 21741-1179 with any other banking
                           institution or affiliate thereof, or in connection
                           with any employment outside of the fifty (50) mile
                           radius solicit any of the banking business of clients
                           or customers of the Employers or any of their
                           affiliates for a period of two years from the date of
                           such termination.

                   (ii)    The Executive will not in connection with any
                           employment outside of the fifty (50) mile radius
                           directly or indirectly solicit the banking business
                           of any potential client who had been identified and
                           discussed as such within the Employers by the time of
                           such termination for a period of two years from such
                           termination. In the event that the Executive violates
                           the provisions of this subparagraph without knowledge
                           of such violation, upon notice from the Employers
                           informing him of the nature of such violation, the
                           Executive shall immediately terminate any actions
                           which constitute such violation.

              (b)  The Executive shall not retain copies of any documents
                   (including without limitation, customer lists) containing any
                   such trade secrets or confidential or proprietary information
                   of the Employers or their affiliates.

              (c)  It is recognized that damages in the event of breach of any
                   provision of this paragraph 4 by the Executive would be
                   difficult, if not impossible, to ascertain, and it is
                   therefore agreed that the Employers, in addition to and
                   without limiting any other remedy or right they may have,
                   shall have the right to an injunction or other

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                  equitable relief in any court or competent jurisdiction,
                  enjoining any such breach; and the Executive hereby waives any
                  and all defenses he may have on the ground of the lack of
                  jurisdiction or competence of the court to grant such an
                  injunction or other equitable relief. The existence of this
                  right shall not preclude any other rights and remedies at law
                  or in equity which the Employers may have.

5.         WITHHOLDING.

         All payments required to be made by the Employers hereunder to the
Executive shall be subject to the withholding of such amounts, if any, relating
to tax and other payroll deductions as the Employers may reasonably determine
should be withheld pursuant to any applicable law or regulation.

6.        ASSIGNABILITY.

         The Employers may assign this Agreement and their rights hereunder in
whole, but not in part, to any corporation, bank or other entity with or into
which the Employers may hereafter merge or consolidate or to which the Employers
may transfer all or substantially all of their assets, if in any such case said
corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employers hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or their rights hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.

7.         NOTICE.

         For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

                  To the Employers:         F&M Bancorp

                                            Attn:  Faye E. Cannon, President
                                            P.O. Box 518
                                            Frederick, Maryland 21705

                  To the Executive:         Richard W. Phoebus, Sr.
                                            1419 Lindsay Lane
                                            Hagerstown, Md. 21742

8.        AMENDMENT; WAIVER.

         No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and such officer or officers as may be specifically designated by
the Boards of Directors of the Employers to sign on their behalf. No waiver by
any party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be

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deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time.

9.        GOVERNING LAW.

         The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Maryland.

10.       NATURE OF EMPLOYMENT AND OBLIGATIONS.

         (a) Nothing contained herein shall be deemed to create other than a
terminable at will employment relationship between the Employers and the
Executive, and the Employers may, subject to such other arrangements as may
exist between the Employers and the Executive, terminate the Executive's
employment at any time, subject to providing any payments specified herein in
accordance with the terms hereof.

         (b) Nothing contained herein shall create or require the Employers to
create a trust of any kind to fund any benefits which may be payable hereunder,
and to the extent that the Executive acquires a right to receive benefits from
the Employers hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Employers.

         (c) The obligations of the Employers under the terms of this Agreement
shall be enforceable by the Executive on the basis of the respective Employers'
joint and severable liability.

11.      TERM OF AGREEMENT.

         This Agreement shall terminate three (3) years after the date first
above written; provided that on or prior to the first anniversary of the date
first above written and each anniversary thereafter, the Boards of Directors of
the Employers shall consider (with appropriate corporate documentation thereof,
and after taking into account all relevant factors, including Executive's
performance as an employee) renewal of the term of this Agreement for an
additional one (1) year, and the term of this Agreement shall be so extended
unless the Boards of Directors of Employers do not approve such renewal and
provide written notice to the Executive, or the Executive gives written notice
to the Employers, thirty (30) days prior to the date of any such anniversary, of
such party's or parties' election not to extend the term beyond their then
scheduled expiration date; and provided further that, notwithstanding the
foregoing to the contrary, this Agreement shall be automatically extended for an
additional one (1) year upon a Change-in-Control of the Employers.

12.      HEADINGS

         The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

13.      VALIDITY.

         The invalidity or unenforceability of any provision of this Agreement
shall not affect the

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validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.

14.      COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

15.       REGULATORY PROHIBITION.

         Notwithstanding any other provision of this Agreement to the contrary,
the obligations of the Employers and the Executive hereunder shall be suspended
or limited, as the case may be, in the event that the FDIC prohibits or limits,
by regulation or order, any payment hereunder pursuant to Section 18(k) of the
FDIA (12 U.S.C. Section 1828(k)).

         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

         Attest:  F&M BANCORP, FOR ITS SELF AND ITS SUBSIDIARY, HOME FEDERAL
SAVINGS BANK

______________________              By:     ______________________________
                                                     Faye E. Cannon, President
                                                     and Chief Executive Officer

----------------------                      ------------------------------
Witness                                              Richard W. Phoebus, Sr.,
                                                     Executive<PAGE>

                                  EXHIBIT 10.10

                                   F&M BANCORP
                 CONVERSION OF PATAPSCO VALLEY BANCSHARES, INC.
                STOCK OPTIONS HELD BY OFFICERS AND KEY EMPLOYEES
                                DECEMBER __, 1999

         Pursuant to Section 1.5 of the Agreement and Plan of Merger by and
between F&M Bancorp and Patapsco Valley Bancshares, Inc. ("Patapsco"), dated as
of September 7, 1999, as amended (the "Merger Agreement"), F&M Bancorp hereby
grants to you the substitute stock options as set forth below. Such substitute
options shall be subject to the terms and conditions set forth in the Patapsco
Valley Bancshares, Inc. Incentive Stock Option Plan. The Prospectus for the
Patapsco Valley Bancshares, Inc. Incentive Stock Option Plan is attached hereto
as Exhibit A.

         Each Patapsco stock option held by you is hereby converted into an F&M
Bancorp stock option which entitles you to purchase a number of shares of F&M
Bancorp common stock equal to the number of shares of Patapsco common stock (as
to each whole share) which could have been purchased under each Patapsco stock
option multiplied by the Exchange Ratio (as defined in the Merger Agreement),
rounded down to the nearest whole share. The per share exchange price of each
F&M Bancorp stock option granted hereunder shall be equal to the price per share
set forth in each Patapsco stock option divided by the Exchange Ratio (as
defined in the Merger Agreement), rounded up to the nearest whole cent.

CONVERSION CALCULATION:

Exchange Ratio:  1.18
Officer/Key Employee:

PATAPSCO STOCK OPTIONS:

DATE OF GRANT          SHARES SUBJECT            EXPIRATION          EXERCISE
                       TO OPTION                   DATE                PRICE

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F&M BANCORP SUBSTITUTE STOCK OPTIONS:

DATE OF GRANT          SHARES SUBJECT            EXPIRATION          EXERCISE
                       TO OPTION                   DATE                PRICE

         IN WITNESS WHEREOF, having been duly authorized, we have signed this
document as of the ___th day of December, 1999.

                                                     F&M Bancorp

                                                     By: _______________________
                                                     Name:    Faye E. Cannon
                                                     Title:   President and
                                                     Chief Executive Officer

                                                     By: _______________________
                                                     Name:    Gordon M. Cooley
                                                     Title:   Secretary

NOTE: WHEN YOU ARE READY TO EXERCISE OPTIONS, OR IF YOU HAVE QUESTIONS ABOUT
EXERCISING OPTIONS, PLEASE CALL BRAD ROHRER IN THE FARMERS & MECHANICS
NATIONAL BANK FINANCE DEPARTMENT, (301) 695-3075.

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                                  EXHIBIT 10.10

PROSPECTUS                                                             EXHIBIT A

          PATAPSCO VALLEY BANCSHARES, INC. INCENTIVE STOCK OPTION PLAN

Pursuant to the Agreement and Plan of Merger (the "Merger") by and between F&M
Bancorp and Patapsco Valley Bancshares, Inc. ("Patapsco"), dated as of September
7, 1999, as amended (the "Merger Agreement"), F&M Bancorp has acquired all the
outstanding shares of common stock, par value $.01 per share of Patapsco
("Patapsco Common Stock"). In accordance with the terms of the Merger Agreement,
each then-outstanding option to purchase Patapsco Common Stock under Patapsco's
Incentive Stock Option Plan, as amended (the "Stock Option Plan") became an
option to acquire a number of shares of common stock, par value $5.00 per share,
of F&M Bancorp ("F&M Bancorp Common Stock"), but remained subject to the terms
and conditions of the Stock Option Plan. The number of shares and the exercise
price per share of F&M Bancorp Common Stock subject to each such converted
option has been determined using the formula described in the Prospectus.
Following the conversion of options in accordance with the terms of the Merger
Agreement, there were options outstanding under the Stock Option Plan with
respect to 43,542 shares of F&M Bancorp Common Stock, which shares of F&M
Bancorp Common Stock are covered by this Prospectus.

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

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

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

               The date of this Prospectus is December [ ], 1999.

No person is authorized to give any information or to make any representations
other than those contained in this Prospectus in connection with the offering
described herein, and, if given or made, such information or representations
must not be relied upon. This Prospectus does not constitute an offer of any
securities other than those to which it relates, or an offer to sell or a
solicitation of an offer to buy any securities in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any sales made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of F&M Bancorp since the date hereof.

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

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                             DESCRIPTION OF THE PLAN

                        PATAPSCO VALLEY BANCSHARES, INC.
                           INCENTIVE STOCK OPTION PLAN

ISSUER; DURATION
F&M Bancorp, the principal executive offices of which are at 110 Thomas Johnson
Drive, Frederick, Maryland 21702, telephone (301) 694-4000, is the issuer of the
securities being offered under the Stock Option Plan, which are 43,542 shares of
F&M Bancorp Common Stock. The Stock Option Plan was effective on April 21, 1998
and subsequently approved by Patapsco's stockholders and will continue in effect
until all awards granted thereunder have been exercised, satisfied or cancelled
under the terms of the Stock Option Plan.

GENERAL
The purpose of the Stock Option Plan is to encourage the sense of proprietorship
on the part of officers and key employees of Patapsco, to recognize past
valuable services of such officers and key employees, to furnish such officers
and key employees with further incentive to develop and promote the business and
financial success of Patapsco (and by virtue of the Merger, F&M Bancorp) and to
induce such officers and key employees to continue in the service of Patapsco.

The summary of the Stock Option Plan contained in this Prospectus is subject to
the actual terms of the Stock Option Plan. A copy of the Stock Option Plan is on
file with F&M Bancorp's Secretary.

The Stock Option Plan provides for the grant of stock options which qualify as
incentive stock options with the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") ("ISOs"). The foregoing are referred to
herein as "options", and recipients of any options will be referred to
individually or collectively as "optionees". It is not anticipated, however,
that any additional options will be issued under the Stock Option Plan.

The Stock Option Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), nor is the Plan a
qualified plan within the meaning of section 401(a) of the Code.

PLAN ADMINISTRATION
The Stock Option Plan was administered, prior to the Merger, by the President of
Patapsco and, following the Merger, will be administered by a committee
appointed by F&M Bancorp's board of directors (the "Board"). The committee has
the authority to construe and interpret the Stock Option Plan and the respective
option agreements entered into thereunder, and to make all other determinations
necessary or advisable for administering the Stock Option Plan. The decisions of
the committee on any questions concerning or involving the interpretation or
administration of the Stock Option Plan are final and conclusive. Members of the
committee will serve at the discretion of the Board. Participants in the Stock
Option Plan may obtain additional information about the Stock Option Plan and
its administrators by contacting Gordon M. Cooley, Esq., F&M Bancorp's
Secretary and General Counsel, at the address set forth above.

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SECURITIES SUBJECT TO THE STOCK OPTION PLAN

For purposes of this Prospectus, the Stock Option Plan covers 43,542 shares
of F&M Bancorp Common Stock.

ELIGIBILITY
Options have been granted under the Stock Option Plan only to the President of
Patapsco, and executive officers and other key employees selected in accordance
with the provisions of the Stock Option Plan by the President of Patapsco, and
who at the time the options were granted did not own stock possessing more than
10% of the total combined voting power of all classes of outstanding stock of
Patapsco.

EXERCISE OF OPTIONS
All options granted under the Stock Option Plan that were outstanding as of the
consummation of the Merger have been converted into options to acquire F&M
Bancorp Common Stock. The number of shares of F&M Bancorp Common Stock subject
to each such converted option is equal to (a) the number of shares of Patapsco
Common Stock subject to the original Patapsco option, times (b) the number 1.18
(rounded down to the nearest whole share). The exercise price per share of F&M
Bancorp Common Stock subject to each such converted option is equal to (a) the
exercise price per share of Patapsco Common Stock under the original Patapsco
option, divided by (b) the number 1.18 (rounded up to the nearest whole cent).

Each option granted under the Stock Option Plan expires on the tenth anniversary
of the date the option was granted. An option may, however, terminate prior such
date in the event the optionee's service terminates or upon the occurrence of
certain other events (as described below).

No option may be exercised unless and until the optionee has remained in
continuous employ of Patapsco or F&M Bancorp for thirty-six (36) months from the
date the option was granted and the optionee is employed by Patapsco or F&M
Bancorp at the time of exercise; except, however, that in the event of the death
of such optionee while in the employ of Patapsco or F&M Bancorp, or retirement
of such optionee within twenty-four (24) months from the date such option was
granted, such option shall become exercisable immediately on the date of such
death or retirement.

An option may be exercised either at one time as to the total number of shares
covered thereby, or from time to time as to any portion thereof in units of one
hundred (100) shares or multiples thereof.

In the event of the death of an optionee, the option or options granted to such
optionee may be exercised by the legal respresentatives of the estate of such
optionee or by the person to whom such optionee's rights under the option shall
pass by will or the laws of descent and distribution.

Payment of the exercise price for options granted under the Stock Option Plan
may be made in cash, by check payable to the order of F&M Bancorp, with shares
of F&M Bancorp Common Stock to the extent the fair market value of such shares,
or a combination thereof, at the time of the exercise of the option.

                                       3

<PAGE>

TERMINATION OF EMPLOYMENT
In the event of the termination of an optionee's employment for any cause (other
than death, disability or retirement), whether by reason of resignation or
discharge, each option granted to such optionee shall terminate immediately
prior to such termination.

Each option granted to an optionee shall terminate twelve (12) months from the
date of such optionee's death, provided such optionee at the time of his or her
death was in the employ of Pataspsco or F&M Bancorp.

PURCHASE OF SHARES FOR INVESTMENT
Each optionee and each other person who shall exercise an option shall represent
and agree that all shares pursuant to such option will be purchased for
investment and not for distribution or resale thereof.

TRANSFERABILITY
Each option granted under the Stock Option Plan is not transferable except by
will or the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by the optionee.

AMENDMENT; TERMINATION
Unless the Stock Option Plan shall theretofore have been terminated by the
Board, the Stock Option Plan shall terminate on February 25, 2008. The Board
shall have the right, at any time, to suspend, amend or terminate the Stock
Option Plan; provided, however, that no termination of the Stock Option Plan
shall affect or impair the rights of an optionee under any option previously
granted under the Stock Option Plan.

RESTRICTIONS ON RESALE

This Prospectus does not cover sales or other dispositions of the F&M Bancorp
Common Stock received under the Stock Option Plan by any person who may be
deemed to be an affiliated person. Such sales or other dispositions may be made
in compliance with the registration requirements of the federal securities laws
or the requirements of Rule 144 promulgated thereunder, without being subject to
the holding period requirement of such rule, or may be made pursuant to another
exemption from such registration. There will be no such restrictions upon sales
or other dispositions of F&M Bancorp Common Stock by recipients who are not
affiliated persons. An affiliated person, for purposes of the federal securities
laws, generally means a senior officer, director or other person who is deemed
to control F&M Bancorp.

CERTAIN FEDERAL INCOME TAX EFFECTS

The following discussion of certain relevant federal income tax effects
applicable to options granted under the Stock Option Plan is a summary only, and
reference is made to the Code for a complete statement of all relevant federal
tax provisions. It is recommended that holders of options consult their tax
advisers before exercise of any option granted under the Stock Option Plan and
before disposing of any shares of F&M Bancorp Common Stock acquired upon the
exercise thereof or

                                       4
<PAGE>

otherwise pursuant to the Stock Option Plan. Different rules may apply in the
case of an optionee who is subject to the reporting requirements of Section
16(a) of the Exchange Act. All options granted under the Stock Option Plan are
ISOs and are entitled to special tax treatment under section 422 of the Code.

INCENTIVE STOCK OPTIONS
An optionee will not be taxed upon the grant of an ISO. Exercise of an ISO will
be timely if made during its term and if the optionee remains an employee of F&M
Bancorp, Patapsco or a subsidiary of F&M Bancorp at all times during the period
beginning on the date of grant of the ISO and ending on the date three months
before the date of exercise (or one year before the date of exercise in the case
of a disabled optionee). Exercise of an ISO will also be timely if made by the
legal representative of an optionee who dies (i) while in the employ of the F&M
Bancorp, Patapsco or a subsidiary of F&M Bancorp or (ii) within three months
after termination of employment. The tax consequences of an untimely exercise of
an ISO will be determined in accordance with the rules applicable to NSOs.

If stock acquired pursuant to the timely exercise of an ISO is later disposed
of, and if the stock is a capital asset of the optionee, the optionee will,
except as noted below, recognize short-term or long-term capital gain or loss
(depending upon the length of time such shares were held by the optionee) equal
to the difference between the amount realized upon such sale and the exercise
price. F&M Bancorp, under these circumstances, will not be entitled to any
federal income tax deduction in connection with either the exercise of the ISO
or the sale of such stock by the optionee. If, however, stock acquired pursuant
to the exercise of an ISO is disposed of by the optionee prior to the expiration
of two years from the date of grant of the ISO or within one year from the date
such stock is transferred to him upon exercise (a "disqualifying disposition"),
any gain realized by the optionee generally will be taxable at the time of such
disqualifying disposition as follows: (i) at ordinary income rates to the extent
of the difference between the exercise price and the lesser of the fair market
value of the stock on the date the ISO is exercised or the amount realized on
such disqualifying disposition and (ii) if the stock is a capital asset of the
optionee, as short-term or long-term capital gain (depending upon the length of
time such shares were held by the optionee) to the extent of any excess of the
amount realized on such disqualifying disposition over the fair market value of
the stock on the date which governs the determination of his ordinary income. In
such case, F&M Bancorp may claim a federal income tax deduction at the time of
such disqualifying disposition for the amount taxable to the optionee as
ordinary income. Any capital gain recognized by the optionee will generally be
taxable as long-term or short-term capital gain or loss (if the stock is a
capital asset of the optionee) depending upon how long the stock had been held
as of the date of such disposition.

The amount by which the fair market value of the stock on the exercise date of
an ISO exceeds the option price will be an item of adjustment for purposes of
the "alternative minimum tax" imposed by Section 55 of the Code.

NONQUALIFIED STOCK OPTIONS
An optionee generally will not be taxed upon the grant of an NSO. Rather, at the
time of exercise of such NSO, the optionee will recognize ordinary income for
federal income tax purposes in an amount equal to the excess of the fair market
value of the shares purchased over the exercise price. F&M Bancorp will
generally be entitled to a tax deduction at such time and in the same amount
that the optionee recognizes ordinary income.

                                       5
<PAGE>

If shares acquired upon exercise of an NSO are later sold or exchanged, then the
difference between the amount received upon such sale, exchange or disposition
and the fair market value of such stock on the date of such exercise will
generally be taxable as long-term or short-term capital gain or loss (if the
stock is a capital asset of the optionee) depending upon the length of time such
shares were held by the optionee.

EXERCISE WITH SHARES
Generally, an optionee who pays the option price upon exercise of an NSO, in
whole or in part, by delivering shares of F&M Bancorp Common Stock already owned
by him will recognize no gain or loss for federal income tax purposes on the
shares surrendered, but otherwise will be taxed according to the rules described
above for NSOs. With respect to shares acquired upon exercise which are equal in
number to the shares surrendered, the basis of such shares will be equal to the
basis of the shares surrendered, and the holding period of shares acquired will
include the holding period of the shares surrendered. The basis of additional
shares received upon exercise will be equal to the fair market value of such
shares on the date which governs the determination of the optionee's ordinary
income, and the holding period for such additional shares will commence on such
date.

                    AVAILABLE REGISTRANT AND PLAN INFORMATION

This Prospectus hereby incorporates by reference the documents that have been
incorporated by reference in Item 3 of Part II of F&M Bancorp's registration
statements on Form S-8 for shares issuable under the Stock Option Plan filed
with the Securities and Exchange Commission ("SEC") on or before the date of
this prospectus. These documents include F&M Bancorp's annual report on Form
10-K for its most recent fiscal year, F&M's subsequently filed quarterly reports
on Form 10-Q and reports that F&M Bancorp has filed with the SEC subsequently or
will file with the SEC in the future, such as reports on Forms 8-K, 10-K and
10-Q. Copies of any or all of these documents, excluding exhibits not
specifically incorporated by reference in such documents, will be provided upon
request without charge to any participant. A copy of the plan document will also
be provided upon request without charge to any participant.

A copy of F&M Bancorp's most recent annual report to stockholders has been
delivered or is being delivered with this Prospectus, and an additional copy of
such report will be furnished upon request without charge to any participant.
F&M Bancorp will also provide without charge to each participant all other
stockholder communications and other reports furnished to stockholders of F&M
Bancorp on a continuing basis.

All written or oral requests for documents or information should be directed to
Gordon M. Cooley, Esq., F&M Bancorp's Secretary and General Counsel, at the
address and telephone number indicated on page 3 hereto.

                                       6

<PAGE>

                                  EXHIBIT 10.10

                                   F&M BANCORP
                 CONVERSION OF PATAPSCO VALLEY BANCSHARES, INC.
                    STOCK OPTIONS HELD NON-EMPLOYEE DIRECTORS
                                DECEMBER __, 1999

         Pursuant to Section 1.5 of the Agreement and Plan of Merger by and
between F&M Bancorp and Patapsco Valley Bancshares, Inc. ("Patapsco"), dated as
of September 7, 1999, as amended (the "Merger Agreement"), F&M Bancorp hereby
grants to you the substitute stock options as set forth below. Such substitute
options shall be subject to the terms and conditions set forth in the Patapsco
Valley Bancshares, Inc. Director's Stock Option Plan. The Prospectus for the
Patapsco Valley Bancshares, Inc. Director's Stock Option Plan is attached hereto
as Exhibit A.

         Each Patapsco stock option held by you is hereby converted into an F&M
Bancorp stock option which entitles you to purchase a number of shares of F&M
Bancorp common stock equal to the number of shares of Patapsco common stock (as
to each whole share) which could have been purchased under each Patapsco stock
option multiplied by the Exchange Ratio (as defined in the Merger Agreement),
rounded down to the nearest whole share. The per share exchange price of each
F&M Bancorp stock option granted hereunder shall be equal to the price per share
set forth in each Patapsco stock option divided by the Exchange Ratio (as
defined in the Merger Agreement), rounded up to the nearest whole cent.

CONVERSION CALCULATION:

Exchange Ratio:  1.18
Non-Employee Director:

PATAPSCO STOCK OPTIONS:

DATE OF GRANT          SHARES SUBJECT            EXPIRATION          EXERCISE
                       TO OPTION                   DATE                PRICE

                                       1

<PAGE>

F&M BANCORP SUBSTITUTE STOCK OPTIONS:

DATE OF GRANT          SHARES SUBJECT            EXPIRATION          EXERCISE
                       TO OPTION                   DATE                PRICE

         IN WITNESS WHEREOF, having been duly authorized, we have signed this
document as of the ___th day of December, 1999.

                                                     F&M Bancorp

                                                     By: _______________________
                                                     Name:    Faye E. Cannon
                                                     Title:   President and
                                                     Chief Executive Officer

                                                     By: _______________________
                                                     Name:    Gordon M. Cooley
                                                     Title:   Secretary

NOTE: WHEN YOU ARE READY TO EXERCISE OPTIONS, OR IF YOU HAVE QUESTIONS ABOUT
EXERCISING OPTIONS, PLEASE CALL BRAD ROHRER IN THE FARMERS & MECHANICS
NATIONAL BANK FINANCE DEPARTMENT, (301) 695-3075.

                                       2

<PAGE>

                                  EXHIBIT 10.10

PROSPECTUS                                                             EXHIBIT A

          PATAPSCO VALLEY BANCSHARES, INC. DIRECTOR'S STOCK OPTION PLAN

Pursuant to the Agreement and Plan of Merger (the "Merger") by and between F&M
Bancorp and Patapsco Valley Bancshares, Inc. ("Patapsco"), dated as of September
7, 1999, as amended (the "Merger Agreement"), F&M Bancorp has acquired all the
outstanding shares of common stock, par value $.01 per share of Patapsco
("Patapsco Common Stock"). In accordance with the terms of the Merger Agreement,
each then-outstanding option to purchase Patapsco Common Stock under Patapsco's
Director's Stock Option Plan (the "Stock Option Plan") became an option to
acquire a number of shares of common stock, par value $5.00 per share, of F&M
Bancorp ("F&M Bancorp Common Stock"), but remained subject to the terms and
conditions of the Stock Option Plan. The number of shares and the exercise price
per share of F&M Bancorp Common Stock subject to each such converted option has
been determined using the formula described in the Prospectus. Following the
conversion of options in accordance with the terms of the Merger Agreement,
there were options outstanding under the Stock Option Plan with respect to
49,560 shares of F&M Bancorp Common Stock, which shares of F&M Bancorp Common
Stock are covered by this Prospectus.

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

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

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

               The date of this Prospectus is December [ ], 1999.

No person is authorized to give any information or to make any representations
other than those contained in this Prospectus in connection with the offering
described herein, and, if given or made, such information or representations
must not be relied upon. This Prospectus does not constitute an offer of any
securities other than those to which it relates, or an offer to sell or a
solicitation of an offer to buy any securities in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any sales made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of F&M Bancorp since the date hereof.

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

                                       1

<PAGE>

                             DESCRIPTION OF THE PLAN

                        PATAPSCO VALLEY BANCSHARES, INC.
                          DIRECTOR'S STOCK OPTION PLAN

ISSUER; DURATION
F&M Bancorp, the principal executive offices of which are at 110 Thomas Johnson
Drive, Frederick, Maryland 21702, telephone (301) 694-4000, is the issuer of the
securities being offered under the Stock Option Plan, which are 49,560 shares of
F&M Bancorp Common Stock. The Stock Option Plan was effective on April 21, 1998
and subsequently approved by Patapsco's stockholders and will continue in effect
until all awards granted thereunder have been exercised, satisfied or cancelled
under the terms of the Stock Option Plan.

GENERAL
The purpose of the Stock Option Plan is to encourage the sense of proprietorship
on the part of non-employee directors of Patapsco, to recognize past valuable
services of such non-employee directors, to furnish such non-employee directors
with further incentive to develop and promote the business and financial success
of Patapsco and to induce such non-employee directors to continue in the service
of Patapsco.

The summary of the Stock Option Plan contained in this Prospectus is subject to
the actual terms of the Stock Option Plan. A copy of the Stock Option Plan is on
file with F&M Bancorp's Secretary.

The Stock Option Plan provides for the grant of stock options which do not
qualify as incentive stock options with the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), known as nonqualified
stock options ("NSOs"). The foregoing are referred to herein as "options", and
recipients of any options will be referred to individually or collectively as
"optionees". It is not anticipated, however, that any additional options will be
issued under the Stock Option Plan.

The Stock Option Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), nor is the Plan a
qualified plan within the meaning of section 401(a) of the Code.

PLAN ADMINISTRATION
The Stock Option Plan was administered, prior to the Merger, by the President of
Patapsco and, following the Merger, will be administered by a committee
appointed by F&M Bancorp's board of directors (the "Board"). The committee has
the power and authority to construe and interpret the Stock Option Plan and the
respective option agreements entered into thereunder. The decisions of the
committee on any questions concerning or involving the interpretation or
administration of the Stock Option Plan are final and conclusive. Members of the
committee will serve at the discretion of the Board. Participants in the Stock
Option Plan may obtain additional information about the Stock Option Plan and
its administrators by contacting Gordon M. Cooley, Esq., F&M Bancorp's
Secretary and General Counsel, at the address set forth above.

                                       2

<PAGE>

SECURITIES SUBJECT TO THE STOCK OPTION PLAN
For purposes of this Prospectus, the Stock Option Plan covers 49,560 shares of
F&M Bancorp Common Stock.

ELIGIBILITY
Options have been granted under the Stock Option Plan only to non-employee
directors of Patapsco.

EXERCISE OF OPTIONS
All options granted under the Stock Option Plan that were outstanding as of the
consummation of the Merger have been converted into options to acquire F&M
Bancorp Common Stock. The number of shares of F&M Bancorp Common Stock subject
to each such converted option is equal to (a) the number of shares of Patapsco
Common Stock subject to the original Patapsco option, times (b) the number 1.18
(rounded down to the nearest whole share). The exercise price per share of F&M
Bancorp Common Stock subject to each such converted option is equal to (a) the
exercise price per share of Patapsco Common Stock under the original Patapsco
option, divided by (b) the number 1.18 (rounded up to the nearest whole cent).

Each option granted under the Stock Option Plan expires on the tenth anniversary
of the date the option was granted. An option may, however, terminate prior such
date in the event the optionee's service terminates or upon the occurrence of
certain other events (as described below).

An option may be exercised either at one time as to the total number of shares
covered thereby, or from time to time as to any portion thereof in units of one
hundred (100) shares or multiples thereof.

In the event of the death of an optionee, the option or options granted to such
optionee may be exercised by the legal respresentatives of the estate of such
optionee or by the person to whom such optionee's rights under the option shall
pass by will or the laws of descent and distribution.

Payment of the exercise price for options granted under the Stock Option Plan
may be made in cash, by check payable to the order of F&M Bancorp, with shares
of F&M Bancorp Common Stock to the extent the fair market value of such shares,
or a combination thereof, at the time of the exercise of the option.

TERMINATION OF SERVICE AS A DIRECTOR
In the event of the termination of an optionee's service as a director for any
cause (other than death or mandatory retirement because of age), each option
granted to such optionee shall terminate immediately prior to such termination.

Each option granted to an optionee shall terminate twelve (12) months from the
date of such optionee's death, provided such optionee at the time of his or her
death was a director of Pataspsco.

TRANSFERABILITY
Each option granted under the Stock Option Plan is not transferable except by
will or the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by the optionee.

                                       3

<PAGE>

PURCHASE OF SHARES FOR INVESTMENT
Each optionee and each other person who shall exercise an option shall represent
and agree that all shares pursuant to such option will be purchased for
investment and not for distribution or resale thereof.

AMENDMENT; TERMINATION
Unless the Stock Option Plan shall theretofore have been terminated by the
Board, the Stock Option Plan shall terminate on February 25, 2008. The Board
shall have the right, at any time, to suspend, amend or terminate the Stock
Option Plan; provided, however, that no termination of the Stock Option Plan
shall affect or impair the rights of an optionee under any option previously
granted under the Stock Option Plan.

RESTRICTIONS ON RESALE
This Prospectus does not cover sales or other dispositions of the F&M Bancorp
Common Stock received under the Stock Option Plan by any person who may be
deemed to be an affiliated person. Such sales or other dispositions may be made
in compliance with the registration requirements of the federal securities laws
or the requirements of Rule 144 promulgated thereunder, without being subject to
the holding period requirement of such rule, or may be made pursuant to another
exemption from such registration. There will be no such restrictions upon sales
or other dispositions of F&M Bancorp Common Stock by recipients who are not
affiliated persons. An affiliated person, for purposes of the federal securities
laws, generally means a senior officer, director or other person who is deemed
to control F&M Bancorp.

CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion of certain relevant federal income tax effects
applicable to options granted under the Stock Option Plan is a summary only, and
reference is made to the Code for a complete statement of all relevant federal
tax provisions. It is recommended that holders of options consult their tax
advisers before exercise of any option granted under the Stock Option Plan and
before disposing of any shares of F&M Bancorp Common Stock acquired upon the
exercise thereof or otherwise pursuant to the Stock Option Plan. Different rules
may apply in the case of an optionee who is subject to the reporting
requirements of Section 16(a) of the Exchange Act. All options granted under the
Stock Option Plan are NSOs and are not entitled to special tax treatment under
section 422 of the Code.

NONQUALIFIED STOCK OPTIONS
An optionee generally will not be taxed upon the grant of an NSO. Rather, at the
time of exercise of such NSO, the optionee will recognize ordinary income for
federal income tax purposes in an amount equal to the excess of the fair market
value of the shares purchased over the exercise price. F&M Bancorp will
generally be entitled to a tax deduction at such time and in the same amount
that the optionee recognizes ordinary income.

If shares acquired upon exercise of an NSO are later sold or exchanged, then the
difference between the amount received upon such sale, exchange or disposition
and the fair market value of such stock on the date of such exercise will
generally be taxable as long-term or short-term capital gain or loss (if the
stock is a capital asset of the optionee) depending upon the length of time such
shares were held by the optionee.

                                       4

<PAGE>

EXERCISE WITH SHARES
Generally, an optionee who pays the option price upon exercise of an NSO, in
whole or in part, by delivering shares of F&M Bancorp Common Stock already owned
by him will recognize no gain or loss for federal income tax purposes on the
shares surrendered, but otherwise will be taxed according to the rules described
above for NSOs. With respect to shares acquired upon exercise which are equal in
number to the shares surrendered, the basis of such shares will be equal to the
basis of the shares surrendered, and the holding period of shares acquired will
include the holding period of the shares surrendered. The basis of additional
shares received upon exercise will be equal to the fair market value of such
shares on the date which governs the determination of the optionee's ordinary
income, and the holding period for such additional shares will commence on such
date.

AVAILABLE REGISTRANT AND PLAN INFORMATION

This Prospectus hereby incorporates by reference the documents that have been
incorporated by reference in Item 3 of Part II of F&M Bancorp's registration
statements on Form S-8 for shares issuable under the Stock Option Plan filed
with the Securities and Exchange Commission ("SEC") on or before the date of
this prospectus. These documents include F&M Bancorp's annual report on Form
10-K for its most recent fiscal year, F&M's subsequently filed quarterly reports
on Form 10-Q and reports that F&M Bancorp has filed with the SEC subsequently or
will file with the SEC in the future, such as reports on Forms 8-K, 10-K and
10-Q. Copies of any or all of these documents, excluding exhibits not
specifically incorporated by reference in such documents, will be provided upon
request without charge to any participant. A copy of the plan document will also
be provided upon request without charge to any participant.

A copy of F&M Bancorp's most recent annual report to stockholders has been
delivered or is being delivered with this Prospectus, and an additional copy of
such report will be furnished upon request without charge to any participant.
F&M Bancorp will also provide without charge to each participant all other
stockholder communications and other reports furnished to stockholders of F&M
Bancorp on a continuing basis.

All written or oral requests for documents or information should be directed to
Gordon M. Cooley, Esq., F&M Bancorp's Secretary and General Counsel, at the
address and telephone number indicated on page 3 hereto.

                                       5

<PAGE>

                                  EXHIBIT 10.10

                                   F&M BANCORP
                 CONVERSION OF PATAPSCO VALLEY BANCSHARES, INC.
                         STOCK OPTIONS HELD BY EMPLOYEES
                                DECEMBER __, 1999

         Pursuant to Section 1.5 of the Agreement and Plan of Merger by and
between F&M Bancorp and Patapsco Valley Bancshares, Inc. ("Patapsco"), dated as
of September 7, 1999, as amended (the "Merger Agreement"), F&M Bancorp hereby
grants to you the substitute stock options as set forth below. Such substitute
options shall be subject to the terms and conditions set forth in the Patapsco
Valley Bancshares, Inc. Employee Stock Purchase Plan. The Prospectus for the
Patapsco Valley Bancshares, Inc. Employee Stock Purchase Plan is attached hereto
as Exhibit A.

         Each Patapsco stock option held by you is hereby converted into an F&M
Bancorp stock option which entitles you to purchase a number of shares of F&M
Bancorp common stock equal to the number of shares of Patapsco common stock (as
to each whole share) which could have been purchased under each Patapsco stock
option multiplied by the Exchange Ratio (as defined in the Merger Agreement),
rounded down to the nearest whole share. The per share exchange price of each
F&M Bancorp stock option granted hereunder shall be equal to the price per share
set forth in each Patapsco stock option divided by the Exchange Ratio (as
defined in the Merger Agreement), rounded up to the nearest whole cent.

CONVERSION CALCULATION:

Exchange Ratio:  1.18
Employee:

PATAPSCO STOCK OPTIONS:

DATE OF GRANT          SHARES SUBJECT            EXPIRATION          EXERCISE
                       TO OPTION                   DATE                PRICE

                                       1

<PAGE>

F&M BANCORP SUBSTITUTE STOCK OPTIONS:

DATE OF GRANT          SHARES SUBJECT            EXPIRATION          EXERCISE
                       TO OPTION                   DATE                PRICE

         IN WITNESS WHEREOF, having been duly authorized, we have signed this
document as of the ___th day of December, 1999.

                                                     F&M Bancorp

                                                     By: _______________________
                                                     Name:    Faye E. Cannon
                                                     Title:   President and
                                                     Chief Executive Officer

                                                     By: _______________________
                                                     Name:    Gordon M. Cooley
                                                     Title:   Secretary

NOTE: WHEN YOU ARE READY TO EXERCISE OPTIONS, OR IF YOU HAVE QUESTIONS ABOUT
EXERCISING OPTIONS, PLEASE CALL BRAD ROHRER IN THE FARMERS & MECHANICS
NATIONAL BANK FINANCE DEPARTMENT, (301) 695-3075.

                                       2

<PAGE>

                                  EXHIBIT 10.10

PROSPECTUS                                                             EXHIBIT A

          PATAPSCO VALLEY BANCSHARES, INC. EMPLOYEE STOCK PURCHASE PLAN

Pursuant to the Agreement and Plan of Merger (the "Merger") by and between F&M
Bancorp and Patapsco Valley Bancshares, Inc. ("Patapsco"), dated as of September
7, 1999, as amended (the "Merger Agreement"), F&M Bancorp has acquired all the
outstanding shares of common stock, par value $.01 per share of Patapsco
("Patapsco Common Stock"). In accordance with the terms of the Merger Agreement,
each then-outstanding option to purchase Patapsco Common Stock under Patapsco's
Employee Stock Purchase Plan, as amended (the "Stock Purchase Plan") became an
option to acquire a number of shares of common stock, par value $5.00 per share,
of F&M Bancorp ("F&M Bancorp Common Stock"), but remained subject to the terms
and conditions of the Stock Purchase Plan. The number of shares and the exercise
price per share of F&M Bancorp Common Stock subject to each such converted
option has been determined using the formula described in the Prospectus.
Following the conversion of options in accordance with the terms of the Merger
Agreement, there were options outstanding under the Stock Purchase Plan with
respect to 48,498 shares of F&M Bancorp Common Stock, which shares of F&M
Bancorp Common Stock are covered by this Prospectus.

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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

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               The date of this Prospectus is December [ ], 1999.

No person is authorized to give any information or to make any representations
other than those contained in this Prospectus in connection with the offering
described herein, and, if given or made, such information or representations
must not be relied upon. This Prospectus does not constitute an offer of any
securities other than those to which it relates, or an offer to sell or a
solicitation of an offer to buy any securities in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any sales made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of F&M Bancorp since the date hereof.

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

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                             DESCRIPTION OF THE PLAN

                        PATAPSCO VALLEY BANCSHARES, INC.
                          EMPLOYEE STOCK PURCHASE PLAN

ISSUER; DURATION
F&M Bancorp, the principal executive offices of which are at 110 Thomas Johnson
Drive, Frederick, Maryland 21702, telephone (301) 694-4000, is the issuer of the
securities being offered under the Stock Purchase Plan, which are 48,498 shares
of F&M Bancorp Common Stock. The Stock Purchase Plan was effective on April 21,
1998 and subsequently approved by Patapsco's stockholders and will continue in
effect until all awards granted thereunder have been exercised, satisfied or
cancelled under the terms of the Stock Purchase Plan.

GENERAL
The purpose of the Stock Purchase Plan is to encourage the sense of
proprietorship on the part of employees of Patapsco, to recognize past valuable
services of such employees, to furnish such employees with further incentive to
develop and promote the business and financial success of Patapsco (and by
virtue of the Merger, F&M Bancorp) and to induce such employees to continue in
the service of Patapsco.

The summary of the Stock Purchase Plan contained in this Prospectus is subject
to the actual terms of the Stock Purchase Plan. A copy of the Stock Purchase
Plan is on file with F&M Bancorp's Secretary.

The Stock Purchase Plan provides for the grant of stock options which are
qualified options within the meaning of Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"). The foregoing are referred to herein as
"options", and recipients of any options will be referred to individually or
collectively as "optionees". It is not anticipated, however, that any additional
options will be issued under the Stock Purchase Plan.

The Stock Purchase Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), nor is the Plan a
qualified plan within the meaning of section 401(a) of the Code.

PLAN ADMINISTRATION
The Stock Purchase Plan was administered, prior to the Merger, by the President,
Chief Operating Officer and Chief Financial Officer of Patapsco and, following
the Merger, will be administered by a committee appointed by F&M Bancorp's board
of directors (the "Board"). The committee has the authority to construe and
interpret the Stock Purchase Plan and the respective option agreements entered
into thereunder, and to make all other determinations necessary or advisable for
administering the Stock Purchase Plan. The decisions of the committee on any
questions concerning or involving the interpretation or administration of the
Stock Purchase Plan are final and conclusive. Members of the committee will
serve at the discretion of the Board. Participants in the Stock Purchase Plan
may obtain additional information about the Stock Purchase Plan and its
administrators by contacting

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Gordon M. Cooley, Esq., F&M Bancorp's Secretary and General Counsel, at the
address set forth above.

SECURITIES SUBJECT TO THE STOCK PURCHASE PLAN
For purposes of this Prospectus, the Stock Purchase Plan covers 48,498 shares of
F&M Bancorp Common Stock.

ELIGIBILITY
Options have been granted under the Stock Purchase Plan only to employees of
Patapsco who at the time the options were granted did not own stock possessing
more than 5% of the total combined voting power of all classes of outstanding
stock of Patapsco.

EXERCISE OF OPTIONS
All options granted under the Stock Purchase Plan that were outstanding as of
the consummation of the Merger have been converted into options to acquire F&M
Bancorp Common Stock. The number of shares of F&M Bancorp Common Stock subject
to each such converted option is equal to (a) the number of shares of Patapsco
Common Stock subject to the original Patapsco option, times (b) the number 1.18
(rounded down to the nearest whole share). The exercise price per share of F&M
Bancorp Common Stock subject to each such converted option is equal to (a) the
exercise price per share of Patapsco Common Stock under the original Patapsco
option, divided by (b) the number 1.18 (rounded up to the nearest whole cent).

Each option granted under the Stock Purchase Plan expires twenty-seven months
from the date the option was granted. An option may, however, terminate prior
such date in the event the optionee's service terminates or upon the occurrence
of certain other events (as described below).

No option may be exercised unless and until the optionee has remained in
continuous employ of Patapsco or F&M Bancorp for twelve (12) months from the
date the option was granted and the optionee is employed by Patapsco or F&M
Bancorp at the time of exercise; except, however, that in the event of the death
of such optionee while in the employ of Patapsco or F&M Bancorp, or retirement
of such optionee within twenty-four (24) months from the date such option was
granted, such option shall become exercisable immediately on the date of such
death or retirement.

An option may be exercised either at one time as to the total number of shares
covered thereby, or from time to time as to any portion thereof in units of ten
(10) shares or multiples thereof.

In the event of the death of an optionee, the option or options granted to such
optionee may be exercised by the legal respresentatives of the estate of such
optionee or by the person to whom such optionee's rights under the option shall
pass by will or the laws of descent and distribution.

Payment of the exercise price for options granted under the Stock Purchase Plan
may be made in cash, by check payable to the order of F&M Bancorp, with shares
of F&M Bancorp Common Stock to the extent the fair market value of such shares,
or a combination thereof, at the time of the exercise of the option.

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TERMINATION OF EMPLOYMENT
In the event of the termination of an optionee's employment for any cause (other
than death, disability or retirement), whether by reason of resignation or
discharge, each option granted to such optionee shall terminate immediately
prior to such termination.

Each option granted to an optionee shall terminate twelve (12) months from the
date of such optionee's death, provided such optionee at the time of his or her
death was in the employ of Pataspsco or F&M Bancorp.

TRANSFERABILITY
Each option granted under the Stock Purchase Plan is not transferable except by
will or the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by the optionee.

PURCHASE OF SHARES FOR INVESTMENT
Each optionee and each other person who shall exercise an option shall represent
and agree that all shares pursuant to such option will be purchased for
investment and not for distribution or resale thereof.

AMENDMENT; TERMINATION
Unless the Stock Purchase Plan shall theretofore have been terminated by the
Board, the Stock Purchase Plan shall terminate on February 17, 2008. The Board
shall have the right, at any time, to suspend, amend or terminate the Stock
Purchase Plan; provided, however, that no termination of the Stock Purchase Plan
shall affect or impair the rights of an optionee under any option previously
granted under the Stock Purchase Plan.

RESTRICTIONS ON RESALE

This Prospectus does not cover sales or other dispositions of the F&M Bancorp
Common Stock received under the Stock Purchase Plan by any person who may be
deemed to be an affiliated person. Such sales or other dispositions may be made
in compliance with the registration requirements of the federal securities laws
or the requirements of Rule 144 promulgated thereunder, without being subject to
the holding period requirement of such rule, or may be made pursuant to another
exemption from such registration. There will be no such restrictions upon sales
or other dispositions of F&M Bancorp Common Stock by recipients who are not
affiliated persons. An affiliated person, for purposes of the federal securities
laws, generally means a senior officer, director or other person who is deemed
to control F&M Bancorp.

CERTAIN FEDERAL INCOME TAX EFFECTS

The following discussion of certain relevant federal income tax effects
applicable to options granted under the Stock Purchase Plan is a summary only,
and reference is made to the Code for a complete statement of all relevant
federal tax provisions. It is recommended that holders of options consult their
tax advisers before exercise of any option granted under the Stock Purchase Plan
and before

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<PAGE>

disposing of any shares of F&M Bancorp Common Stock acquired upon the exercise
thereof or otherwise pursuant to the Stock Purchase Plan. Different rules may
apply in the case of an optionee who is subject to the reporting requirements of
Section 16(a) of the Exchange Act. All options granted under the Stock Purchase
Plan are qualified options entitled to special tax treatment under section 423
of the Code.

QUALIFIED OPTIONS
An optionee will not be taxed upon the grant of a qualified option. If stock
acquired pursuant to the timely exercise of a qualified option is later disposed
of, and if the stock is a capital asset of the optionee, the optionee will,
except as noted below, recognize short-term or long-term capital gain or loss
(depending upon the length of time such shares were held by the optionee) equal
to the difference between the amount realized upon such sale and the exercise
price. F&M Bancorp, under these circumstances, will not be entitled to any
federal income tax deduction in connection with either the exercise of the
qualified option or the sale of such stock by the optionee.

If, however, stock acquired pursuant to the exercise of a qualified option is
disposed of by the optionee prior to the expiration of two years from the date
of grant of the qualified option or within one year from the date such stock is
transferred to him upon exercise (a "disqualifying disposition"), any gain
realized by the optionee generally will be taxable at the time of such
disqualifying disposition as follows: (i) at ordinary income rates to the extent
of the difference between the exercise price and the lesser of the fair market
value of the stock on the date the qualified option is exercised or the amount
realized on such disqualifying disposition and (ii) if the stock is a capital
asset of the optionee, as short-term or long-term capital gain (depending upon
the length of time such shares were held by the optionee) to the extent of any
excess of the amount realized on such disqualifying disposition over the fair
market value of the stock on the date which governs the determination of his
ordinary income. In such case, F&M Bancorp may claim a federal income tax
deduction at the time of such disqualifying disposition for the amount taxable
to the optionee as ordinary income. Any capital gain recognized by the optionee
will generally be taxable as long-term or short-term capital gain or loss (if
the stock is a capital asset of the optionee) depending upon how long the stock
had been held as of the date of such disposition.

The amount by which the fair market value of the stock on the exercise date of a
qualified option exceeds the option price will be an item of adjustment for
purposes of the "alternative minimum tax" imposed by Section 55 of the Code.

EXERCISE WITH SHARES
Generally, an optionee who pays the option price upon exercise of a qualified
option, in whole or in part, by delivering shares of F&M Bancorp Common Stock
already owned by him will recognize no gain or loss for federal income tax
purposes on the shares surrendered, but otherwise will be taxed according to the
rules described above for qualified options. With respect to shares acquired
upon exercise which are equal in number to the shares surrendered, the basis of
such shares will be equal to the basis of the shares surrendered, and the
holding period of shares acquired will include the holding period of the shares
surrendered. The basis of additional shares received upon exercise will be equal
to the fair market value of such shares on the date which governs the
determination of the optionee's ordinary income, and the holding period for such
additional shares will commence on such date.

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<PAGE>

                    AVAILABLE REGISTRANT AND PLAN INFORMATION

This Prospectus hereby incorporates by reference the documents that have been
incorporated by reference in Item 3 of Part II of F&M Bancorp's registration
statements on Form S-8 for shares issuable under the Stock Purchase Plan filed
with the Securities and Exchange Commission ("SEC") on or before the date of
this prospectus. These documents include F&M Bancorp's annual report on Form
10-K for its most recent fiscal year, F&M's subsequently filed quarterly reports
on Form 10-Q and reports that F&M Bancorp has filed with the SEC subsequently or
will file with the SEC in the future, such as reports on Forms 8-K, 10-K and
10-Q. Copies of any or all of these documents, excluding exhibits not
specifically incorporated by reference in such documents, will be provided upon
request without charge to any participant. A copy of the plan document will also
be provided upon request without charge to any participant.

A copy of F&M Bancorp's most recent annual report to stockholders has been
delivered or is being delivered with this Prospectus, and an additional copy of
such report will be furnished upon request without charge to any participant.
F&M Bancorp will also provide without charge to each participant all other
stockholder communications and other reports furnished to stockholders of F&M
Bancorp on a continuing basis.

All written or oral requests for documents or information should be directed to
Gordon M. Cooley, Esq., F&M Bancorp's Secretary and General Counsel, at the
address and telephone number indicated on page 3 hereto.

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