Exhibit 10.87


                                                                 Director's
                                                                 Option
                                                                 (Annual)


                           RJR NABISCO HOLDINGS CORP.

                STOCK OPTION PLAN FOR DIRECTORS AND KEY EMPLOYEES

                             STOCK OPTION AGREEMENT


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

                                 DATE OF GRANT:

                              W I T N E S S E T H:



     1. Grant of Option. Pursuant to the provisions of the Stock Option
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Plan for Directors and Key Employees of RJR Nabisco Holdings Corp. And
Subsidiaries (the "Plan"), RJR Nabisco Holdings Corp. (the "Company") on
the above date has granted to

                             (the "Optionee"),

subject to the terms and conditions which follow and the terms and
conditions of the Plan, the right and option to exercise from the Company a
total of

                                   shares

of Common Stock, no par value, of the Company, at the exercise price of $
per share (the "Option"). A copy of the Plan is attached and made a part of
this agreement with same effect as if set forth in the agreement itself.
All capitalized terms used herein shall have the meaning set forth in the
Plan, unless the context requires a different meaning.

     2. Exercise of 0ption.
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     (a)  Shares may be purchased by giving the Corporate Secretary of the
          Company written notice of exercise, on a form prescribed by the
          Company, specifying the number of whole shares to be purchased.
          The notice of exercise shall be accompanied by tender to the
          Company of cash for the full purchase price of the shares with
          respect to which such Option or portion thereof is exercised,
          together with payment for taxes pursuant to Section 9 herein.



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     (b)  This Option shall be exercisable in three installments. The first
          installment shall be exercisable on the 1st of April following
          Date of Grant for 33% of the number of shares of Common Stock
          subject to this option. Thereafter, on each subsequent April 1st,
          an installment shall become exercisable for 33% and 34%,
          respectively, of the number of shares subject to this Option
          until the option has become fully exercisable. To the extent that
          any of the above installments is not exercised when it becomes
          exercisable, it shall not expire, but shall continue to be
          exercisable at any time thereafter until this Option shall
          terminate, expire or be surrendered. An exercise shall be for
          whole shares only.

     (c)  This Option shall not be exercisable prior to six months after
          the Date of Grant.

     (d)  If any shares of the Common Stock are to be disposed of in
          accordance with Rule 144 under the Securities Act of 1933 or
          otherwise, the Optionee shall promptly notify the Company of such
          intended disposition and shall deliver to the Company at or prior
          to the time of such disposition such documentation as the Company
          may reasonably request in connection with such sale and, in the
          case of a disposition pursuant to Rule 144, shall deliver to the
          Company an executed copy of any notice on Form 144 required to be
          filed with the SEC.

     3. Rights in the Event of Resignation or Non-Election to the Board.
        ---------------------------------------------------------------
Except as may be otherwise provided in this Section 3, after the Optionee's
resignation or non-election to the Board of Directors of the Company (the
"Board"), the Option shall not become exercisable as to any shares in
                           ---
addition to those already exercisable pursuant to the schedule described in
Section 2(b). Notwithstanding the foregoing, if a non-election of the
Optionee to the Board is due to death or Permanent Disability (as defined
in the Company's Long Term Disability Plan), the Option shall immediately
become exercisable as to all shares.

     4. Expiration of Option. The Option shall expire or terminate and may
        --------------------
not be exercised to any extent by the Optionee after the tenth anniversary
of the Date of Grant.

     5. Transferability. Other than as specifically provided with regard to
        ---------------
the death of the Optionee, this option agreement and any benefit provided
or accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and
any attempt to do so shall be void. No such benefit shall, prior to receipt
thereof by the Optionee, be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the Optionee.

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<PAGE>

     6. Consideration to the Company. In consideration of the granting of
        ----------------------------
this Option by the Company, the Optionee agrees to render faithful and
efficient services to the Company, with such duties and responsibilities as
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the service of the
Company or any Subsidiary as a director or in any other capacity or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries and their respective shareholders, which are hereby expressly
reserved, in connection with the removal of the Optionee from the Board of
Directors of the Company or any Subsidiary at any time for any reason
whatsoever, with or without cause, subject to applicable law and the
relevant certificate of incorporation and bylaws.

     7. Adjustments in Option. In the event that the outstanding shares of
        ---------------------
the Common Stock subject to the Option are, from time to time, changed into
or exchanged for a different number or kind of shares of the Company or
other securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee shall make an appropriate and equitable adjustment
in the number and kind of shares or other consideration as to which the
Option, or portions thereof then unexercised, shall be exercisable. Any
adjustment made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons.

     8. Application of Laws. The granting and the exercise of this Option
        -------------------
and the obligations of the Company to sell and deliver shares hereunder
shall be subject to all applicable laws, rules, and regulations and to such
approvals of any governmental agencies as may be required.

     9. Taxes. Any taxes required by federal, state, or local laws to be
        -----
withheld by the Company (i) on exercise by the Optionee of the Option for
Common Stock, or (ii) at the time an election, if any, is made by the
Optionee pursuant to Section 83(b) of the Internal Revenue Code, as
amended, shall be paid to the Company before delivery of the Common Stock
is made to the Optionee.

     10. Notices. Any notices required to be given hereunder to the Company
         -------
shall be addressed to The Secretary, RJR Nabisco Holdings Corp., 1301 Avenue
of the Americas, New York, NY 10019-6013, and any notice required to be
given hereunder to the Optionee shall be sent to the Optionee's address as
shown on the records of the Company.

     11. Administration and Interpretation. In consideration of the grant,
         ----------------------------------
the Optionee specifically agrees that the Committee shall have the
exclusive power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan
and Agreement as are consistent therewith and to interpret or revoke any
such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final, conclusive, and binding upon the
Optionee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan

                                   -3-

<PAGE>

or the Agreement. The Committee may delegate its interpretive authority to
an officer or officers of the Company.

     12. Other Provisions.
         -----------------
     a)   Titles are provided herein for convenience only and are not to
serve as a basis for interpretation of the Agreement.

     b)   This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this
Agreement.

     c)   THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS
OF LAWS.

     IN WITNESS WHEREOF, the Company, by its duly authorized officer, and
the Optionee have executed this Agreement as of the date of Grant first
above written.

                              RJR NABISCO HOLDINGS CORP.

                               By                            
                                  ---------------------------
                                    Authorized Signatory

                           
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       Optionee


Optionee's Taxpayer Identification Number:

                           
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Optionee's Home Address:

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