<PAGE>

                                                                   Exhibit 10.42

                             STOCK OPTION AGREEMENT
                           CHAMPION ENTERPRISES, INC.
                               INDUCEMENT OPTIONS

         THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this 30th
day of April, 2002 (the "Grant Date"), by and between Champion Enterprises,
Inc., a Michigan corporation ("the Company"), and Abdul Rajput (the "Optionee").

                                   WITNESSETH:

         WHEREAS, Optionee is employed as President of HomePride Finance Corp. a
subsidiary of the Company; and

         WHEREAS, the Company wishes to provide additional incentive to
Optionee, to encourage stock ownership by Optionee, and to encourage Optionee to
remain in the employ of the Company; and

         WHEREAS, the Company desires that Optionee keep certain information
that Optionee has acquired during Optionee's employment with the Company
confidential, and that Optionee not compete with the Company for at least two
years after Optionee's employment with the Company is terminated.

         NOW, THEREFORE, the Company and Optionee hereby agree as follows:

         1.       DEFINITIONS. For purposes of this Agreement, certain words and
phrases have the following definitions:

                  a)       "Change in Control" means the occurrence of any of
the following events: (1) the acquisition of ownership by a person, firm or
corporation, or a group acting in concert, of fifty-one percent or more of the
outstanding Common Stock of the Company in a single transaction or a series of
related transactions within a one-year period; (2) a sale of all or
substantially all of the assets of the Company to any person, firm or
corporation; or (3) a merger or similar transaction between the Company and
another entity if shareholders of the Company do not own a majority of the
voting stock of the corporation surviving the transaction and a majority in
value of the total outstanding stock of such surviving corporation after the
transaction;

                  b)       "Code" means the Internal Revenue Code of 1986, as
amended;

                  c)       "Committee" means the Compensation Committee of the
Company;

                  d)       "Common Stock" means the common stock of the Company,
par value $1.00;

                  e)       "Disability" means "disability" as defined under
Section 22(e) of the Code;

                  f)       "Employment" or "Employed" (whether or not
capitalized) means employment with the Company or any Parent or Subsidiary of
the Company;

                  g)       "Good Cause" shall mean Optionee's gross misconduct,
material breach of his duties or this Agreement, failure to follow the
reasonable instructions of his superior, or an act of fraud or dishonesty by the
Optionee.

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                                                                   Exhibit 10.42

                  h)       "Parent" means any "parent corporation" as defined in
Section 424(e) of the Code;

                  i)       "Subsidiary" means any "subsidiary corporation" as
defined in Section 424(f) of the Code; and

         2.       FIRST PART. The Company grants Optionee the right and option
to purchase from the Company 20,000 shares of the Company's Common Stock at a
price equal to 40% of the closing price of the Company's Common Stock on the New
York Stock Exchange on the Grant Date, as reported in The Wall Street Journal
($3.32) (the "First Part"). The First Part must be exercised in its entirety
within 60 days of the Grant Date. This grant of the First Part is conditioned
upon the agreement by Optionee not to sell or otherwise transfer the shares
acquired under this First Part until at least two (2) years from the date of
exercise. In addition, if prior to the second anniversary of the Grant Date,
Optionee terminates his employment with the Company or the Company terminates
the Optionee's employment for Good Cause, Optionee shall retain only the
following shares:

<TABLE>
<CAPTION>
Date Employment Terminated                  Shares Retained
--------------------------                  ---------------
<S>                                         <C>
Prior to 6 months from Grant Date                    0

Prior to 12 months from Grant Date               5,000

Prior to 18 months from Grant Date              10,000

Prior to 24 months from Grant Date              15,000

24 months or more after the Grant Date          20,000
</TABLE>

Shares not retained by Optionee above shall be forfeited and returned to the
Company in exchange for the exercise price paid by Optionee for the forfeited
shares.

         3.       SECOND PART. If Optionee exercises the First Part within 60
days from the Grant Date, the Company grants Optionee the right and option to
purchase from the Company 80,000 shares of the Company's Common Stock at a price
equal to 100% of the closing price of the Company's Common Stock on the New York
Stock Exchange on the Grant Date, as reported in The Wall Street Journal ($8.30)
(the "Second Part"). The Options granted under this Second Part shall not be
immediately exercisable, but shall be exercisable according to the following
schedule:

<TABLE>
<CAPTION>
Number of Option Shares                           Date Exercisable
-----------------------                           ----------------
<S>                                         <C>
         16,000                             1st anniversary of Grant Date

         16,000                             2nd anniversary of Grant Date

         16,000                             3rd anniversary of Grant Date

         16,000                             4th anniversary of Grant Date

         16,000                             5th anniversary of Grant Date
</TABLE>

This grant of the Second Part is conditioned upon the agreement by Optionee not
to sell or otherwise transfer the shares acquired under this Second Part until
at least six (6) months from the date of exercise. No portion of this Second
Part shall be exercisable after the seventh anniversary of the Grant Date. The
Second Part may be exercised in installments. This Second Part is not intended
to be an incentive stock option within the meaning of Section 422 of the Code.
Notwithstanding anything to the contrary contained in this Section

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                                                                   Exhibit 10.42

3, if the Optionee exercises the First Part within 60 days of the Grant Date,
the Second Part shall be immediately exercisable in full upon any Change in
Control.

         4.       TERMINATION OF EMPLOYMENT.

                  a)       Before Option Becomes Exercisable. If Optionee's
employment with the Company shall terminate for any reason prior to Optionee's
exercise in full of the First Part, Optionee's right to exercise any option
under this Agreement shall terminate and all exercise rights hereunder shall
cease. If Optionee exercises in full the First Part but Optionee's employment
with the Company shall terminate for any reason before all or any portion of the
Second Part becomes exercisable, Optionee's right to exercise the un-exercisable
portion of the Second Part shall terminate and all exercise rights relating
thereto shall cease.

                  b)       Death or Disability. If, on or after Optionee's
exercise of the First Part, Optionee shall die or become Disabled, Optionee (or
the executor or administrator of the estate of Optionee, or the person or
persons to whom the option shall have been transferred by will or by the laws of
descent and distribution, or the legal guardian of Optionee, or the individual
designated in Optionee's durable power of attorney in the event of Disability)
shall have the right, within one year from the date of Optionee's death or
Disability, to exercise the Second Part to the extent that it is exercisable and
unexercised on the date of Optionee's death or Disability. This one-year period
may be extended at the discretion of the Committee, but not beyond the seventh
anniversary of the Grant Date.

                  c)       Other Termination. If, on or after the Optionee's
exercise of the First Part, Optionee's employment shall be terminated for any
reason other than death or Disability, Optionee shall have the right, within
three months after such termination of employment, to exercise the Second Part
to the extent that it is exercisable and unexercised on the date of such
termination of employment. This three-month period may be extended at the
discretion of the Committee, but not beyond the seventh anniversary of the Grant
Date.

                  d)       Events Not Constituting a Termination. A change of
job title, a leave of absence with the written consent of the Company, or a
transfer of Optionee from one corporation to another among the Company, its
Parent, or any of its Subsidiaries shall not be deemed a termination of
employment for purposes of this Agreement.

         5.       EXERCISE OF OPTION. Optionee may exercise any exercisable
option granted pursuant to this Agreement by completing the following steps.

                  (a)      Written Notice. Delivery to the Company of a written
notice signed by the Optionee: (1) for the First Part, in the form attached as
EXHIBIT A; or (2) for the Second Part, in the form attached as EXHIBIT B. In
addition, at the request of the Company, Optionee may be required to provide a
written representation that Optionee is acquiring the shares for investment
purposes only, and not for resale.

                  (b)      Purchase Price. Delivery to the Company of cash, a
personal check, bank draft, money order, or Common Stock (or any combination
thereof) equal to the purchase price of the shares then to be purchased. Any
Common Stock tendered shall be valued at the closing price of the Company's
Common Stock on the first business day prior to the exercise date, as reported
in The Wall Street Journal. After receipt of the above and subject to Section 6
below, the company shall issue the shares in the name of Optionee.

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                                                                   Exhibit 10.42

         6.       CONFIDENTIALITY AND NON-COMPETITION. As consideration for the
options granted by this Agreement, Optionee hereby agrees as follows:

                  a)       Confidentiality Agreement. Except with the prior
written consent of the Company, Optionee shall not at any time during or after
the term of this Agreement: (a) disclose, publish, or in any other manner reveal
to any third party any Confidential Information (as defined below) relating to
the business or assets of the Company or its Subsidiaries; or (b) make use of
any Confidential Information (as hereinafter defined) for the Optionee's own
purposes, or for the benefit of any person or entity other than the Company and
its Subsidiaries.

                  b)       Confidential Information Defined. "Confidential
Information" shall mean any and all nonpublic information and documentation
relating to the Company and its Subsidiaries, including but not limited to
information relating to the operations, services, trade secrets, dealer,
distributor and customer lists, promotion and pricing practices, operational
methods, market plans, studies, and forecasts, product development plans,
acquisition plans, design and design projects, inventions and research projects,
compensation information, procurement and sales activities and procedures, the
existence or substance of any agreements between Company (or any Subsidiary) and
any third party, and any and all other information and documentation relating to
the plans and operations of the Company or its Subsidiaries.

                  c)       Non-Competition. Because of the highly competitive
nature of the Company's business, Optionee agrees that as long as Optionee is an
employee or officer of the Company, and for two years following Optionee's
termination of employment with the Company:

                           (1)      Optionee will not, directly or indirectly
(other than on behalf of the Company), as owner, partner, joint venturer,
employee, broker, agent, principal, trustee, corporate officer, licensor,
consultant, or in any capacity whatsoever, engage in, become financially
interested in, or have any connection with, any business located in the United
States or Canada engaged in the production, sales, financing, insuring, or
marketing of manufactured or modular homes or the development of manufactured
housing parks, subdivisions, or other developments containing manufactured or
modular housing;

                           (2)      Optionee will not supply any competing
products, provide any competing services to, or have any other business
relationship with any customer, supplier, developer, venturer, investor or any
other person or entity with whom the Company or its Subsidiaries have done any
business during his employment with the Company;

                           (3)      Optionee will not, directly or indirectly,
induce any person or entity to engage in any activity hereby prohibited to the
Optionee by this Agreement, or to terminate their employment with the Company or
its affiliates; and

                           (4)      Optionee will not, directly or indirectly,
employ or solicit the employment or engagement by others of any past, present or
future employee of the Company and its Subsidiaries unless that employee has not
worked for the Company or its Subsidiaries for at least one year.

If any one of more of the terms contained in this Section or in this Agreement
shall for any reason be held to be excessively broad with regard to time,
duration, geographic scope, or

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                                                                   Exhibit 10.42

activity, that term shall be construed in a manner to enable it to be enforced
to the maximum extent compatible with applicable law.

                  d)       Disclosure of Proprietary Information. Optionee shall
promptly disclose to the Company, in such form and manner as the Company may
reasonably require, all operations, systems, services, methods, developments,
inventions, improvements and other information or data pertaining to the
business or activities of the Company as are conceived, originated, discovered
or developed by Optionee (whether or not copyrighted or patented) during the
term of his employment with the Company, whether before or after the execution
of this Agreement. It is understood that such information is proprietary in
nature and shall be, as between the Company and Optionee, for the exclusive use
and benefit of the Company and shall be and remain the property of the Company.
If so requested by the Company, Optionee shall execute and deliver to the
Company any instrument as the Company may reasonably request to effectuate the
assignment of any such proprietary information to the Company.

                  e)       Termination of Employment. Upon the termination of
Optionee's employment with the Company, Optionee shall deliver to the Company
all records, data and memoranda of every kind and character relating to the
Company and its affiliates, including all copies thereof, which are in
Optionee's possession or control.

                  f)       Remedies for Breach. Optionee acknowledges and agrees
that the Company's remedies at law for any breach of the agreements contained in
this Section 6 would be inadequate. Optionee therefore agrees that in the event
of Optionee's breach of the agreements contained in this Section 6, the Company
shall be entitled to equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction, or any other
equitable remedy or relief which may then be available. Nothing in this Section
shall be construed as prohibiting the Company from pursuing any other remedies
available to it for any such breach, whether in law, equity, or otherwise.

         7.       NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not give
the Optionee any right to be retained or to continued employment with the
Company or any Subsidiary of the Company.

         8.       COMPLIANCE WITH SECURITIES LAWS. Company's obligations under
this Agreement are subject to compliance with federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities, and
any applicable stock exchange requirements, and Company may require Optionee to
provide proof of compliance with those laws, rules, and regulations.

         9.       INVESTMENT INTENT. The Optionee represents and warrants to the
Company that he or she is acquiring all shares of Common Stock under this option
for investment purposes only and not with a view to resale.

         10.      NON-ASSIGNABILITY. The options granted by this Agreement shall
not be transferable by Optionee, other than by will or the laws of descent and
distribution. Any transferee of these options by will or the laws of descent and
distribution shall take them subject to the terms and conditions of this
Agreement, and no such transfer shall be effective to bind the Company unless
the Company is furnished with written notice of the transfer and a copy of the
will or any other evidence the Company deems necessary to establish the

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                                                                   Exhibit 10.42

validity of the transfer. The term "Optionee", as used in this Agreement, shall
include any person or entity to whom any option is transferred.

         11.      WITHHOLDING OF TAXES. Optionee must pay to Company within
fourteen (14) days from the date of any exercise and prior to the issuance of
any Share Certificates any amounts necessary to satisfy any requirements for
withholding of income or employment taxes in connection with that exercise.

         12.      DISPUTES. As a condition to the granting the options contained
in this Agreement, Optionee and Optionee's successors and assigns agree that any
dispute or disagreement which shall arise under or as a result of this Agreement
shall be determined by the Committee in its sole discretion and judgment. Any
such determination or interpretation by the Committee of the terms of this
Agreement shall be final and shall be binding and conclusive for all purposes.

         13.      NOTICES. Every notice relating to this Agreement shall be in
writing, and any notice given by mail shall be by registered or certified mail
with return receipt requested. All notices to the Company shall be delivered to
the following address:

                           Champion Enterprises, Inc.
                           2701 Cambridge Court, Suite 300
                           Auburn Hills, MI 48326-9090
                           Attn: Secretary of the Company

All notices by the Company to Optionee shall be delivered to Optionee
personally, or addressed to Optionee at Optionee's last residence address as
then contained in the records of the Company, or such other address as Optionee
may designate.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

         COMPANY:                   CHAMPION ENTERPRISES, INC.

                                    By:    /s/ WALTER R. YOUNG
                                           ------------------------------------
                                           Walter R. Young
                                           President and Chief Executive Officer

         OPTIONEE:
                                           /s/ ABDUL RAJPUT
                                           -------------------------------------
                                           Abdul Rajput

                                       6

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                                                                   Exhibit 10.42

                                    EXHIBIT A
                        NOTICE OF EXERCISE OF FIRST PART
                       (NON-QUALIFIED STOCK OPTION SHARES)

Secretary
Champion Enterprises, Inc.
2701 Cambridge Court, Suite 300
Auburn Hills, MI 48326-9090

Dear Sir:

         A stock option was granted to me on April 30, 2002, which permits me to
purchase 20,000 shares of Champion Enterprises, Inc. Common Stock at a price of
$3.32 per share.

         I hereby elect to exercise this part of the option to purchase 20,000
non-qualified stock option shares. A personal check [or cash, bank draft, money
order, or common stock] for the purchase price is enclosed with this letter.

         I represent that I will not sell or otherwise transfer any shares that
I purchase pursuant to this letter for a period of two years. I also understand
that if I terminate my employment with the Company or if the Company terminates
my employment for "Good Cause" within two years of the grant date of this
option, a portion of the shares, pro-rated semi-annually, shall be forfeited and
returned to the Company in exchange for the exercise price relating to those
shares.

                                            ___________________________
                                                    Abdul Rajput

Address: _____________________

         _____________________

SSN:     ______-_____-________

Dated:   _____________, 200___

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                                                                   Exhibit 10.42

                                    EXHIBIT B
                        NOTICE OF EXERCISE OF SECOND PART
                       (NON-QUALIFIED STOCK OPTION SHARES)

Secretary
Champion Enterprises, Inc.
2701 Cambridge Court, Suite 300
Auburn Hills, MI 48326-9090

Dear Sir:

         A stock option was granted to me on April 30, 2002, which permits me,
upon the exercise of the First Part of the option within 60 days of the Grant
Date and subject to a five-year graded vesting schedule, to purchase 80,000
stock option shares of Champion Enterprises, Inc. Common Stock at a price of
$8.30 per share.

         I hereby elect to exercise this part of the option to purchase
_________ non-qualified stock option shares. A personal check [or cash, bank
draft, money order, or common stock] for the purchase price is enclosed with
this letter.

         I represent that I will not sell or otherwise transfer any shares that
I purchase pursuant to this letter for a period of six months.

                                            ____________________________
                                                    Abdul Rajput

Address: _____________________

         _____________________

SSN:     ______-_____-________

Dated:   _____________, 200___

                                       8