Document:

EMPLOYMENT
      AGREEMENT

    

    EMPLOYMENT
      AGREEMENT, dated April 2, 2007 (the “Agreement”), by and among Manchester Inc.,
      a Nevada corporation (the “Company”), and Richard D. Gaines (the
“Executive”).

    

    WHEREAS,
      the Company desires to engage Mr. Gaines as an officer to assist the Company
      with the development of its Buy Here/Pay Here car business;

    

    NOW
      THEREFORE, in consideration of the premises and the mutual agreements made
      herein, the Company and Mr. Gaines agree as follows: 

    

    1. Employment;
      Duties.
      The
      Company shall employ the Executive as Executive Vice President of Corporate
      Development. The Executive shall serve the Company in such capacity in addition
      to his current capacity as Corporate Secretary of the Company during the
“Engagement Period” as defined in Section 2. The Executive agrees that during
      the term of his employment hereunder, he shall devote 50% of his professional
      working time to the Company, and give his commercially reasonable efforts,
      skills and abilities to promote the business and interests of the Company.
      The
      precise duties, responsibilities and authority of the Executive may be
      reasonably expanded, limited or modified, from time to time, as directed by
      the
      Board of Directors of the Company or a committee of the Board to which the
      Board
      has delegated such authority (collectively, the “Board”). The Executive agrees
      to faithfully and diligently perform such duties as may from time to time be
      assigned to the Executive by the Board.

    

    2. Employment
      Period.
      This
      Agreement shall have an initial term of three (3) years to be effective as
      of
      the date hereof and ending on March 31, 2010 (the “Initial Period”), unless
      sooner terminated in accordance with the provisions of Section 7 or Section
      8.
      On the expiration of such Initial Period, this Agreement shall automatically
      renew and continue to remain in effect for successive one year periods, until
      terminated in accordance with the provisions of Section 7 or Section 8, unless
      either party provides the other party with written notice of non-renewal not
      later than 10 days prior to the expiration of the Initial Period or the
      anniversary of such date in any subsequent renewal period. Each effective period
      of this Agreement is referred to herein as the “Employment Period.”

    

    3. Compensation
      and Benefits.

    

    (a) Base
      Compensation.
      The
      Executive shall be paid a base salary of $280,000 per annum, payable in monthly
      increments less applicable statutory and regulatory deductions (the “Base
      Salary”). The Base Salary shall be payable each month in accordance with the
      Company’s regular payroll practices, as the same may be modified from time to
      time. In addition, the Executive may, at the discretion of the Board, receive
      such compensation as other members of the Board shall be entitled to, during
      the
      duration of his service thereon. 

    

    (b) Expense
      Reimbursement.
      The
      Executive shall be entitled to reimbursement of reasonable out-of-pocket
      expenses incurred in connection with travel related to the Company's business
      and affairs upon receipt of itemized vouchers approved in accordance with
      Company policy as in effect from time to time. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c) Benefits.
      The
      Executive shall be immediately eligible for participation in any and all Company
      benefits that may be available to employees as in effect from time to time.
      In
      addition, the Executive shall be entitled to receive reimbursement (i) for
      the
      monthly medical and dental insurance premiums of the Executive and his spouse,
      as provided through such insurance carrier as the Executive may designate;
      and
      (ii) the Executive shall be entitled to be provided a Company car or provided
      reimbursement for the monthly cost of a vehicle, including insurance, of the
      make and model selected by Company and approved by the Board.

    

    (d)
       Bonus.
      The
      Executive shall receive an annual bonus to be determined at the sole discretion
      of the Board of Directors.

    

    (e) Equity
      Compensation.
      The
      Executive shall be eligible to receive stock options as granted by the Board
      of
      Directors for the purchase of shares of Company common stock in accordance
      with
      the terms and conditions of the Company’s stock option plan. 

    

    (f) Vacation.
      The
      Executive shall be entitled to three (3) weeks paid vacation per calendar year,
      pro-rated with respect to the portion of the year in which employment commenced
      with the Company, in each case in accordance with Company general policies
      regarding vacations. A maximum of one week of any accrued but untaken vacation
      may be carried over and used up to nine months after the year in which accrued,
      but not thereafter. No compensation shall be paid for accrued but untaken
      vacation.

    

    4. Trade
      Secrets.
      The
      Executive recognizes that it is in the Company's legitimate business interest
      to
      restrict his disclosure or use of trade secrets and confidential information
      relating to the Company or its affiliates for any purpose other than in
      connection with his performance of his duties to the Company. 

    

    5. Return
      of Documents and Property.
      Upon
      the expiration or termination of the Executive's employment with the Company,
      or
      at any time upon the request of the Company, the Executive (or his heirs or
      personal representatives) shall deliver to the Company (a) all documents and
      materials (including, without limitation, computer files) containing Trade
      Secrets and Confidential Information relating to the Company's business and
      affairs, and (b) all documents, materials, equipment and other property
      (including, without limitation, computer files, computer programs, computer
      operating systems, computers, printers, scanners, pagers, telephones, credit
      cards and ID cards) belonging to the Company, which in either case are in the
      possession or under the control of the Executive (or his heirs or personal
      representatives). 

    

    6. Discoveries
      and Works.
      All
      Discoveries and Works made or conceived by the Executive during his employment
      by the Company, solely, jointly or with others, that relate to the Company's
      present or anticipated activities, or are used or useable by the Company shall
      be owned by the Company. The term “Discoveries and Works” includes, by way of
      example but without limitation, Trade Secrets and other Confidential
      Information, patents and patent applications, service marks, and service mark
      registrations and applications, trade names, copyrights and copyright
      registrations and applications. The Executive shall (a) promptly notify, make
      full disclosure to, and execute and deliver any documents requested by the
      Company, as the case may be, to evidence or better assure title to Discoveries
      and Works in the Company, as so requested, (b) renounce any and all claims,
      including but not limited to claims of ownership and royalty, with respect
      to
      all Discoveries and Works and all other property owned or licensed by the
      Company, (c) assist the Company in obtaining or maintaining for itself at its
      own expense United States and foreign patents, copyrights, trade secret
      protection or other protection of any and all Discoveries and Works, and (d)
      promptly execute, whether during his employment with the Company or thereafter,
      all applications or other endorsements necessary or appropriate to maintain
      patents and other rights for the Company and to protect the title of the Company
      thereto, including but not limited to assignments of such patents and other
      rights. Any Discoveries and Works which, within one year after the expiration
      or
      termination of the Executive's employment with the Company, are made, disclosed,
      reduced to tangible or written form or description, or are reduced to practice
      by the Executive and which pertain to the business carried on or products or
      services being sold or delivered by the Company at the time of such termination
      shall, as between the Executive and, the Company, be presumed to have been
      made
      during the Executive's employment by the Company. The Executive acknowledges
      that all Discoveries and Works shall be deemed “works made for hire” under the
      Copyright Act of 1976, as amended 17 U.S.C. Sect. 101.

     

    
      
         

      

      
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    7. Termination.
      

    

    (a) Manner
      of Termination.
      The
      Company and the Executive may terminate this Agreement, with or without cause,
      only in accordance with the provisions of this Section 7. 

    

    (b) Termination
      Without Cause.
      During
      the Employment Period, if the Company terminates this Agreement other than
      for
      cause, the Executive shall continue to receive his salary for 12 additional
      months payable in accordance with the Company’s normal payroll practice, plus
      reimbursement of any and all expenses incurred by Executive as of the date
      of
      notice of such date and through the twelve (12) month anniversary thereof to
      the
      extent otherwise permitted hereunder, plus payment of any and all bonus payments
      payable as of such date, and, subject to the terms and conditions of applicable
      option agreements, all of such equity instruments that would by their own terms
      vest and become exercisable as of the twelve (12) month anniversary date of
      such
      notice of termination other than for cause, which options shall remain so vested
      and exercisable and non-forfeitable by the Executive (but in no event beyond
      the
      expiration of the stated term of such instrument), and all of such payments
      and
      vesting of such equity instruments shall completely and fully discharge any
      and
      all obligations and liabilities of the Company to the Executive with respect
      to
      this Agreement. 

    

    (c) Termination
      for Cause.
      The
      Company may terminate this Agreement for cause at any time during the Employment
      Period effective immediately upon giving written notice of termination to the
      Executive. For purposes of this Agreement, “cause” shall mean, with respect to
      the Executive, (i) any act of fraud or dishonesty, willful misconduct or
      negligence in connection with the Executive's duties, (ii) a breach by the
      Executive of any provision hereof or of any contractual or legal fiduciary
      duty
      to the Company (including, but not limited to, the unauthorized disclosure
      of
      Trade Secrets or other Confidential Information, or non-compliance with the
      policies, guidelines and procedures of the Company), (iii) the arrest of the
      Executive for the commission of a felony, whether or not such alleged felony
      was
      committed in connection with the Company's business or (iv) the commencement
      of
      any bankruptcy proceedings (whether voluntary or involuntary), the appointment
      of a trustee or receiver for the Executive or the general assignment of the
      Executive's assets to his creditors. 

    
      
         

      

      
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    (d) Termination
      by Executive .
      The
      Executive may terminate this Agreement with or without good reason at any time
      during the Employment Period effective immediately upon giving written notice
      of
      termination to the Company. For purposes of this Agreement, with respect to
      the
      Company, “good reason” shall mean (i) the failure to pay any amounts due
      Executive hereunder (and not disputed in good faith by the Company) within
      one
      month after their due date; (ii) breach of performance by the Company of any
      other term herein due to the Executive; (iii) requirement that Executive
      relocate away from his principal residence as of the date of this Agreement;
      (iv) travel on Company related matters without notice of not less than five
      business days; or (v) travel on Company related matters more than five business
      days in any 30 day period days. 

    

    (e) Effect
      of Termination.
      Except
      as otherwise provided herein, in the event this Agreement is terminated for
      cause, the Executive's rights and the Company's obligations hereunder shall
      cease as of the effective date of the termination, including, without
      limitation, the right to receive Base Salary, bonus and all other compensation,
      expense allowance or benefits provided for in this Agreement, and the Executive
      shall not be entitled to any further compensation, expense allowance, benefits,
      or severance compensation of any kind, and shall have no further right or claim
      to any compensation, benefits or severance compensation under this Agreement
      or
      otherwise against the Company or its subsidiaries and affiliates, from and
      after
      the date of such termination. For purposes of clarity, in the event of a
      termination of this Agreement the Executive shall not be entitled to any bonus
      other than any bonus payable through the date of notice of such
      termination.

    

    (f) Change
      in Control Termination.
      Notwithstanding any other provision in this Agreement, in the event the
      Executive's employment with the Company is terminated by the Company following
      a
Change
      in
      Control
      (as
      defined below), the Executive shall receive within ten (10) calendar days of
      notice of such termination, in lieu of the payment specified in Section 7(b)
      above, a lump sum payment equivalent to twelve (12) months salary, plus
      reimbursement of any and all expenses incurred by Executive as of such date,
      plus payment in full of any and all prospective annual bonus payments with
      respect to the next succeeding twelve (12) month Employment Period, and, subject
      to the terms and conditions of the option agreement attached hereto as Exhibit
      A, all of such equity instruments granted therein shall fully and irrevocably
      vest and become exercisable and/or non-forfeitable by the Executive until the
      first anniversary of the termination of the Executive's employment (but in
      no
      event beyond the expiration of the stated term of such instrument), and all
      of
      such payments and vesting of equity instruments shall completely and fully
      discharge any and all obligations and liabilities of the Company to the
      Executive with respect to this Agreement. 

    

    (g) Survival.
      Any
      termination under this Section 7 is subject to the provisions of Sections 18
      and
      20 hereof. 

    
      
         

      

      
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    (h) Relinquishment
      of Authority.
      Notwithstanding anything to the contrary set forth herein, upon written notice
      to the Executive, the Company may immediately relieve the Executive of all
      his
      duties and responsibilities hereunder and may relieve the Executive of authority
      to act on behalf of, or legally bind, the Company.

    

    (i) Change
      in Control.
      For
      purposes of this Agreement “Change in Control” means (i) the acquisition (by
      means of purchase, merger or otherwise) by any person or any two or more persons
      acting as a partnership, syndicate or other group for the purpose of acquiring,
      holding or disposing of such securities of beneficial ownership of fifty-one
      percent (51%) or more of the sum of the amount of the shares of Company common
      stock (the “Shares”) then outstanding, plus any Shares which may be issued
      pursuant to the conversion or exercise of all outstanding options, rights or
      warrants; or (ii) the sale of all or substantially all of the assets of the
      Company. Notwithstanding anything to the contrary, for purposes of this Section,
      a person shall not be deemed to have made an acquisition of beneficial ownership
      of Shares if such person: (a) acquires beneficial ownership of such Shares
      directly from the Company; (b) assumes beneficial ownership of more than the
      permitted percentage of Shares solely as a result of the acquisition of
      beneficial ownership of Shares by the Company which, by reducing the
      proportional beneficial ownership of Shares by other security holders, increases
      the proportional beneficial ownership of Shares by such person; or (c) is (1)
      the Company or any corporation or other person of which a majority of its voting
      power or its equity securities or equity interest is owned directly or
      indirectly by the Company (a “Controlled Entity”) or is owned directly or
      indirectly by the stockholders of the Company in the same proportion as their
      beneficial ownership of Shares or (2) a trustee or other fiduciary holding
      securities under one or more employee benefit plans or arrangements (or any
      trust forming a part thereof) maintained by the Company or any Controlled
      Entity.

    

    (j) For
      purposes of clarity and notwithstanding the foregoing provisions of this
      Section 7, the termination of the Employment Term of this Agreement in
      accordance with ordinary termination of this Agreement without renewal shall
      not
      be deemed to be a termination which requires any supplemental payments,
      compensation, consideration or remuneration of any nature to be paid to the
      Executive as a function of such termination.

    

    8. Disability:
      Death.

    

    (a) If,
      prior
      to the expiration of the Employment Period, the Executive shall be unable to
      perform his duties hereunder by reason of physical or mental disability for
      at
      least thirty (30) consecutive calendar days, the Company shall have the right
      to
      terminate this Agreement and the remainder of the Employment Period by giving
      written notice to the Executive to that effect. Immediately upon the giving
      of
      such notice, the Employment Period shall terminate and such termination shall
      be
      deemed to be a termination without cause. 

    

    (b) Upon
      termination of this Agreement pursuant to Section 8(a), the Executive shall
      be
      paid his Base Salary and bonus (if any) through the effective date of such
      termination and all other compensation and benefits shall be subject to
      Section 7(b). 

    
      
         

      

      
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    (c) In
      the
      event of a dispute as to whether the Executive is disabled within the meaning
      of
      Section 8(a), either party may from time to time request a medical examination
      of the Executive by a doctor appointed by the chief of staff of a hospital
      selected by mutual agreement of the parties, or as the parties may otherwise
      agree, and the written medical opinion of such doctor shall be conclusive and
      binding upon the parties as to whether the Executive has become disabled and
      the
      date when such disability arose. The cost of any such medical examination shall
      be borne by the requesting party. 

    

    (d) If,
      prior
      to the expiration of the Employment Period or the termination of this Agreement,
      the Executive shall die, the Executive's estate shall be paid in accordance
      with
      Section 7(b). Any bonus payable shall be payable on the first bonus payment
      date
      following such termination. Except as otherwise provided in this Section 8(d),
      upon the death of the Executive, the Employment Period shall terminate without
      further notice and the Company shall have no further obligations hereunder,
      including, without limitation, obligations with respect to compensation, expense
      allowance and benefits provided for in Section 3 of this Agreement, other
      than as set forth in in Section 7(b).

    

    (e) Any
      termination under this Section 8 is subject to the provisions of Section 18
      hereof.

    

    9. No
      Conflicts.
      The
      Executive has represented and hereby represents to the Company and its
      affiliates that the execution, delivery and performance by the Executive of
      this
      Agreement do not conflict with or result in a violation or breach of, or
      constitute (with or without notice or lapse of time or both) a default under
      any
      contract, agreement or understanding, whether oral or written, to which the
      Executive is a party or of which the Executive is or should be aware and that
      there are no restrictions, covenants, agreements or limitations on his right
      or
      ability to enter into and perform the terms of this Agreement, and agrees to
      indemnify and save the Company and its affiliates harmless from any liability,
      cost or expense, including attorney’s fees, based upon or arising out of any
      such restrictions, covenants, agreements, or limitations that may be found
      to
      exist. 

    

    For
      purposes of this Agreement, “affiliate” shall include any person or entity
      directly or indirectly controlled by or controlling the Company.

    

    10. Non-competition.
      Except
      as authorized by the Board of Directors, during the Engagement Period Executive
      will not (except as an officer, director, stockholder, employee, agent or
      consultant of the Company or any subsidiary or affiliate thereof) directly,
      own,
      manage, operate, join, or have a financial interest in, control or participate
      in the ownership, management, operation or control of, or be employed as an
      employee, agent or consultant, or in any other individual or representative
      capacity for any business which is directly and geographically competitive
      within a 25 mile radius of any business carried on or planned to be carried
      on
      by the Company or any of its subsidiaries or affiliates.

    
      
         

      

      
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    11. Non-Solicitation.
      During
      the Restricted Period, the Executive, directly or indirectly, whether for his
      account or for the account of any other individual or entity, shall not solicit
      or canvas the trade, business or patronage of, or sell to, any individuals
      or
      entities that were either customers of the Company during the time the Executive
      was employed by the Company, or prospective customers with respect to whom
      a
      sales effort, presentation or proposal was made by the Company or its
      affiliates, during the one year period prior to the termination or expiration
      of
      this Agreement, as the case may be. The Executive further agrees that during
      the
      Restricted Period, he shall not, directly or indirectly, (i) solicit, induce,
      enter into any agreement with, or attempt to influence any individual who was
      an
      employee or consultant of the Company at any time during the time the Executive
      was employed by the Company, to terminate his or her employment relationship
      with the Company or to become employed by the Executive or any individual or
      entity by which the Executive is employed or (ii) interfere in any other way
      with the employment, or other relationship, of any employee or consultant of
      the
      Company or its affiliates.

    

    12. Enforcement.
      The
      Executive agrees that any breach of the provisions of Sections 4, 5, 6, 10
      and
      11 hereof would cause substantial and irreparable harm, not readily
      ascertainable or compensable in terms of money, to the Company for which
      remedies at law would be inadequate and that, in addition to any other remedy
      to
      which the Company may be entitled at law or in equity, the Company shall be
      entitled to temporary, preliminary and other injunctive relief in the event
      the
      Executive violates or threatens to violate the provisions of Sections 4, 5,
      6,
      10 or 11 hereof, as well as damages, including, without limitation consequential
      damages, and an equitable accounting of all earnings, profits and benefits
      arising from such violation, in each case without the need to post any security
      or bond. Nothing herein contained shall be construed as prohibiting the Company
      from pursuing, in addition, any other remedies available to the Company for
      such
      breach or threatened breach. A waiver by the Company of any breach of any
      provision hereof shall not operate or be construed as a waiver of a breach
      of
      any other provision of this Agreement or of any subsequent breach by the
      Executive.

    

    13. Determinations
      by the Company.
      All
      determinations and calculations with respect to this Agreement shall be made
      by
      the Board or any committee thereof to which the Board has delegated such
      authority in accordance with applicable law, the certificate of incorporation
      and by-laws of the Company, in its sole discretion, and shall be final,
      conclusive and binding on all persons, including the Executive and the personal
      representative of his estate. 

    

    14. Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and shall be binding upon (i) the
      Company, its successors and assigns, and any company with which the Company
      may
      merge or consolidate or to which the Company may sell substantially all of
      its
      assets, and (ii) Executive and his executors, administrators, heirs and legal
      representatives. Since the Executive’s services are personal and unique in
      nature, the Executive may not transfer, sell or otherwise assign his rights,
      obligations or benefits under this Agreement.

    
      
         

      

      
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    15. Notices.
      Any
      notice required or permitted under this Agreement shall be deemed to have been
      effectively made or given if in writing and personally delivered, mailed
      properly addressed in a sealed envelope, postage prepaid by certified or
      registered mail, delivered by a reputable overnight delivery service or sent
      by
      facsimile. Unless otherwise changed by notice, notice shall be properly
      addressed to the Executive if addressed to the address of record then on file
      with the Company; and properly addressed to the Company if addressed
      to:

    

    MANCHESTER
      INC.

    100
      Crescent Court, 7th
      Floor

    Dallas,
      Texas 75201

    Attention:
      Board of Directors

    

    with
      a
      copy to:

    

    Wuersch
      & Gering LLP

    100
      Wall
      Street, 21st
      Floor

    New
      York,
      New York 10005

    Telephone:
      212-509-4723

    Telecopier:
      212-509-9559

    Attention:
      Travis L. Gering, Esq.

    

    16. Severability.
      It is
      expressly understood and agreed that although the Company and the Executive
      consider the restrictions contained in this Agreement to be reasonable and
      necessary for the purpose of preserving the goodwill, proprietary rights and
      going concern value of the Company, if a final judicial determination is made
      by
      a court having jurisdiction that any restriction contained in this Agreement
      is
      invalid, the provisions of this Agreement shall not be rendered void but shall
      be deemed amended to apply as to such maximum time and territory and to such
      other extent as such court may judicially determine or indicate to be
      reasonable. Alternatively, if the court referred to above finds that any
      restriction contained in this Agreement or any remedy provided herein is
      unenforceable, and such restriction or remedy cannot be amended so as to make
      it
      enforceable, such finding shall not affect the enforceability of any of the
      other restrictions contained therein or the availability of any other remedy.
      The provisions of this Agreement shall in no respect limit or otherwise affect
      the Executive's obligations under other agreements with the Company.

    

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

    

    18. Effects
      of Termination.
      Notwithstanding anything to the contrary contained herein, if this Agreement
      is
      terminated pursuant to Section 7 or Section 8 or expires by its terms, the
      provisions of Sections 4, 5, 6, 10, 11, 12, 13, 14, 15, 16, 19, 20 and this
      Section 18 shall continue in full force and effect. 

    

    19. Miscellaneous.
      This
      Agreement constitutes the entire agreement, and supersedes all prior agreements,
      of the parties hereto relating to the subject matter hereof, and there are
      no
      written or oral terms or representations made by either party other than those
      contained herein. This Agreement cannot be modified, altered or amended except
      by a writing signed by all the parties. No waiver by either party of any
      provision or condition of this Agreement at any time shall be deemed a waiver
      of
      such provision or condition at any prior or subsequent time or of any other
      provision or condition at the same or any prior or subsequent
      time.

    
      
         

      

      
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    20. Governing
      Law; Arbitration.

    

    (a)
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of New York without giving effect to any choice of law or
      conflict of law provision or rule (whether of the State of New York or any
      other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than the State of New York.

    

    (b)
      The
      parties hereto agree to submit to arbitration any and all matters in dispute
      or
      in controversy among them concerning the terms and provisions of this Agreement.
      All such disputes and controversies shall be determined and adjudged by the
      decision of an arbitrator (hereinafter sometimes called the “Arbitrator”)
      selected by mutual agreement of the parties hereto or if the parties hereto
      fail
      to reach agreement on the Arbitrator within ten days after a party has notified
      the other of its interest to submit a matter to arbitration, the Arbitrator
      shall be selected by the American Arbitration Association upon application
      made
      to it for such purpose by the parties. Arbitration shall take place in the
      City
      of New York in the Borough of Manhattan, or such other place as the parties
      hereto may agree in writing. The Arbitrator shall reach and render a decision
      in
      writing with respect to the amount, if any, of payment respecting the disputed
      matter. The arbitration proceedings shall be held in accordance with the
      applicable rules of the American Arbitration Association. Any award rendered
      shall be final and conclusive upon the parties and adjudgment thereon may be
      entered in the highest court of the forum, state or federal, having
      jurisdiction. The fees and expenses of the Arbitrator and the respective fees
      and expenses of the parties hereto in connection with any such arbitration
      (including, without limitation, reasonable fees and expenses of legal counsel
      and consultants) shall be paid by the party against whom a decision by the
      Arbitrator is rendered.

    
      
         

      

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

     

    
      	 	 	 
	 
 	/s/    	Richard
              D.
              Gaines 
	 	
              
RICHARD
              D. GAINES 
	 	
            

    

    
      	 	 	 
	 	MANCHESTER
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Lawrence
              A. Taylor
	 	
              
Name:
 Lawrence
              A. Taylor
	 	Title:   Executive
              Vice President and Chief Financial
              Officer

    

    
      
         

      

      
        10QUALIFIED
      STOCK OPTION AGREEMENT

    

    THIS
      AGREEMENT, effective as of the 30th
      day of March, 2007 (the “Grant Date”),
      between
      Manchester Inc. (the “Company”), and Lawrence
      Taylor (the
      “Optionee”).

    

    WHEREAS,
      the Board of Directors has determined that it is in the best interest of the
      corporation to provide additional incentive to selected directors, officers,
      employees and consultants of the Company; and

    

    WHEREAS,
      The Corporation desires to grant to the Participant an Option to purchase shares
      of its common capital stock (the "Shares") under and for the purposes of the
      Company’s 2006 Equity Incentive Plan (the "Plan"); and

    

    WHEREAS,
      The Corporation and the Participant understand and agree that any terms used
      herein have the same meanings as in the Plan.

    

    NOW,
      THEREFORE, in consideration of the mutual covenants hereinafter set forth and
      for other good and valuable consideration, the parties hereto agree as
      follows:

    

    1. Grant of Option.
      Effective as of the Grant Date, the Company hereby grants to the Optionee the
      right and option (the “Option”) to purchase all or any part of an aggregate of
200,000
      shares (the
      “Shares”)of Company common stock, par value $.001 per share (the “Common
      Stock”), subject to, and in accordance with, the terms and conditions set forth
      in this Agreement. 

    

    2. Purchase Price.

    

    The
      price
      at which the Optionee shall be entitled to purchase Shares upon the exercise
      of
      the Option shall be US$1.85
      per Share,
      being
      the closing price of the Company’s common stock on the OTC Bulletin Board on the
      effective date of grant of this Option. 

    

    3. Exerciseability
      of Option.

    

    The
      Option shall vest in accordance with the following schedule and become
      exercisable with respect to the following number of Shares covered by the Option
      so long as Optionee remains employed by the Company or continues to serve the
      Company in a consulting capacity as of each such vesting date: 33.3% of the
      Shares on each anniversary of the date of this Agreement.

    

    4. Duration of Option.

    

    (a) The
      Option shall be exercisable to the extent vested and in the manner provided
      herein until the fifth anniversary of the date hereof so long as Optionee
      remains in good standing with the Company as an employee or continuing in
      service as a consultant to the Company. In the event the Optionee is an employee
      of the Company and such employment of the Optionee is terminated for cause,
      the
      Option, whether or not exercisable, shall terminate on the effective date of
      the
      Optionee's termination of employment. If the employment of the Optionee is
      terminated for any reason other than cause, the Optionee may at any time within
      ninety (90) days after such termination of employment (but in no event beyond
      the expiration of the stated term of the Option), exercise the Option to the
      extent, but only to the extent, that the Option or portion thereof was
      exercisable on the date of the termination of employment, after which time
      the
      Option shall terminate in full. Nothing in this Agreement shall be interpreted
      or construed to confer upon the Optionee any right with respect to continuance
      of employment or consulting arrangements with the Company, nor shall this
      Agreement interfere in any way with the right of the Company to terminate the
      Optionee's employment or consulting services at any time.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    QUALIFIED
      STOCK OPTION AGREEMENT

    
      
        

      

    (b)
       Notwithstanding
      any provision to the contrary herein, in
      the event of Optionee's death, his Option shall terminate on the date of death,
      provided that all or a portion of the Option to the extent that the right is
      exercisable but not exercised on the date of death may be exercised by
      Optionee's Survivors. Such Option must be exercised by the Survivors, if at
      all,
      within six (6) months after the date of death of Optionee or, if earlier, within
      the originally prescribed term of the Option, notwithstanding that the decedent
      might have been able to exercise the Option as to some or all of the shares
      on a
      later date if the Optionee were alive and had continued to be a Optionee of
      the
      Corporation or of an Affiliate.

    

    5. Manner of Exercise and Payment.

    

    5.1 Subject
      to the terms and conditions of this Agreement the Option may be exercised by
      delivery of written notice to the Company in the form attached hereto, at its
      principal executive office. Such notice shall state that the Optionee is
      electing to exercise the Option and the number of Shares in respect of which
      the
      Option is being exercised and shall be signed by the person or persons
      exercising the Option. If requested by the Company, such person or persons
      shall
      (i) deliver this Agreement to an Officer of the Company who shall endorse
      thereon a notation of such exercise and (ii) provide satisfactory proof as
      to
      the right of such person or persons to exercise the Option.

    

    5.2 The
      notice of exercise described in Section 5.1 shall be accompanied by payment
      of
      the full purchase price for the Shares in respect of which the Option is being
      exercised, in cash or by check.

    

    5.3 Upon
      receipt of the notice of exercise and any payment or other documentation as
      may
      be necessary pursuant to Section 5.2 relating to the Shares in respect of which
      the Option is being exercised, the Company shall, subject to this Agreement,
      take such action as may be necessary to effect the transfer to the Optionee
      of
      the number of Shares as to which such exercise was effective.

    

    5.4 The
      Optionee shall not be deemed to be the holder of, or to have any of the rights
      of a holder with respect to any Shares subject to the Option until (i) the
      Option shall have been exercised pursuant to the terms of this Agreement and
      the
      Optionee shall have paid the full purchase price for the number of Shares in
      respect of which the Option was exercised, (ii) the Company shall have issued
      and delivered the Shares to the Optionee, and (iii) the Optionee's name
      shall have been entered as a stockholder of record on the books of the Company,
      whereupon the Optionee shall have full voting and other ownership rights with
      respect to such Shares during the period of ownership thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

      QUALIFIED
        STOCK OPTION AGREEMENT

      
        
          

        

    

    6. Notices.
      All
      notices, demands, instructions and other communications required or permitted
      to
      be given to or made upon either Party hereto or any other person shall be in
      writing and shall be personally delivered or sent by registered or certified
      mail, postage prepaid, return receipt requested, or by a reputable courier
      delivery service, or by telegram (with messenger delivery), or by telecopy
      (confirmed by mail), and shall be deemed to be given for purposes of this
      Agreement on the day that such writing is delivered or sent to the intended
      recipient thereof in accordance with the provisions of this Section. Unless
      otherwise specified in a notice sent or delivered in accordance with the
      foregoing provisions of this Section, notices, demands, instructions and other
      communications in writing shall be given to or made upon the respective Parties
      hereto, in the case of the Optionee to
      the
      address of record on file with the Company; and in the case of the Company,
      to
      the principal executive office of the Company addressed to the Corporate
      Secretary.

    

    7. Non-Transferability.

    

    The
      Option shall not be transferable other than by will or by the laws of descent
      and distribution or pursuant to a qualified domestic relations order as defined
      in the U.S. Internal Revenue Code. During the lifetime of the Optionee, the
      Option shall be exercisable only by the Optionee, except in the case of an
      Option transferred pursuant to a qualified domestic relations order.

    

    8. Securities
      Act Restrictions; Sales of Shares.

    

    The
      Optionee acknowledges that neither the U.S. Securities and Exchange Commission
      (the “SEC”) nor any state securities commission has approved the Option nor any
      Shares issuable upon exercise thereof, nor passed upon or endorsed the merits
      of
      this Option or the Shares; the Optionee further understands and agrees that
      neither the Option nor the Shares have been registered (i) under with the SEC
      under the Securities Act of 1933, as amended (the “Securities Act”) or (ii) with
      any state securities commission. The Optionee understands that the neither
      the
      Option nor the Shares may be offered, sold, transferred or otherwise disposed
      of
      in the U.S., its territories or possessions, or to persons known to be residents
      of the U.S. or to a U.S. person within the meaning of the Securities Act and
      the
      rules promulgated thereunder; provided that the Shares may be so sold after
      the
      earlier to occur of the effectiveness of a registration statement registering
      the Shares under the Securities Act or the expiration of the restricted period
      under Rule 144 promulgated under the Securities Act and thereafter only if
      the
      Shares are registered under the Securities Act or an exemption from the
      registration requirements under the Securities Act is available. The Optionee
      acknowledges that the Company has no obligation to cause the registration of
      this Option or the Shares under the Securities Act. Following exercise of some
      or all of the Option, Optionee agrees not to sell or transfer more than 25%
      of
      the aggregate of all such Shares underlying the Option during any single
      calendar quarter and that the certificates representing such Shares shall bear
      a
      legend to such effect. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      
         

        QUALIFIED
          STOCK OPTION AGREEMENT

        
          
            

          

      

    

    9. Adjustments.

    

    In
      the
      event of a change applicable to the entire class of shares of Common Stock,
      such
      as a stock split, stock dividend, or similar action with respect to all issued
      and outstanding shares of Common Stock, the Board of Directors shall make
      corresponding adjustments to the number of Shares subject to this Option and
      the
      purchase price for such Shares. For purposes of clarity, however, no adjustments
      shall be made with respect to issuances of Common Stock by the Company or any
      instruments exercisable or convertible into shares of Common Stock.

    

    10. Effect of a Liquidation, Merger or Consolidation.

    

    Upon
      the
      effective date of (i) the liquidation or dissolution of the Company or
      (ii) a merger or consolidation of the Company (a ”Transaction”), the
      Option shall continue in effect in accordance with its terms and the Optionee
      shall be entitled to receive in respect of each Share subject to the Option,
      upon exercise of the Option, the same number and kind of stock, securities,
      cash, property or other consideration that each holder of a Share was entitled
      to receive in the Transaction in respect of a Share.

    

    11. Withholding of Taxes;
      Qualified Stock Option Treatment

    

    The
      Company shall have the right to deduct from any distribution of cash to the
      Optionee an amount equal to the federal, state and local income taxes and other
      amounts as may be required by law to be withheld (the “Withholding Taxes”) with
      respect to the Option. If the Optionee is entitled to receive Shares upon
      exercise of the Option, the Optionee shall pay the Withholding Taxes to the
      Company in cash prior to the issuance of such Shares. In satisfaction of the
      Withholding Taxes, the Optionee may make a written election (the “Tax
      Election”), which may be accepted or rejected in the discretion of the Company,
      to have withheld a portion of the Shares issuable to him or her upon exercise
      of
      the Option, having an aggregate Fair Market Value, on the date preceding the
      date of such issuance, equal to the Withholding Taxes. This Option shall be
      construed as a qualified stock option for purposes of interpretation under
      the
      Internal Revenue Code of 1986, as amended, and the rules and regulations
      promulgated thereunder.

    

    12. No
      Assignment.

    

    Except
      as
      otherwise provided herein, the rights of the Optionee hereunder may not be
      assigned or otherwise transferred to any other party.

    

    13. Modification of Agreement.

    

    This
      Agreement may be modified, amended, suspended or terminated, and any terms
      or
      conditions may be waived, but only by a written instrument executed by the
      parties hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      QUALIFIED
        STOCK OPTION AGREEMENT

      
        
          

        

    

    14. Severability.

    

    Should
      any provision of this Agreement be held by a court of competent jurisdiction
      to
      be unenforceable or invalid for any reason, the remaining provisions of this
      Agreement shall not be affected by such holding and shall continue in full
      force
      in accordance with their terms.

    

    15. Successors in Interest.

    

    All
      obligations imposed upon the Optionee and all rights granted to the Company
      under this Agreement shall be final, binding and conclusive upon the Optionee's
      heirs, executors, administrators, successors and (subject to Section 12 above)
      assigns of the parties hereto.

    

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

    

    17. Entire
      Agreement.
      This
      Agreement constitutes the entire agreement, and supersedes all prior agreements,
      of the parties hereto relating to the subject matter hereof, and there are
      no
      written or oral terms or representations made by either party other than those
      contained herein. This Agreement cannot be modified, altered or amended except
      by a writing signed by all the parties. No waiver by either party of any
      provision or condition of this Agreement at any time shall be deemed a waiver
      of
      such provision or condition at any prior or subsequent time or of any other
      provision or condition at the same or any prior or subsequent time.

    

    18. Governing
      Law; Arbitration.

    

    (a)
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of Texas without giving effect to any choice of law or
      conflict of law provision or rule (whether of the State of Texas or any other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than the State of Texas.

    

    (b)
      The
      parties hereto agree to submit to arbitration any and all matters in dispute
      or
      in controversy among them concerning the terms and provisions of this Agreement.
      All such disputes and controversies shall be determined and adjudged by the
      decision of an arbitrator (hereinafter sometimes called the “Arbitrator”)
      selected by mutual agreement of the parties hereto or if the parties hereto
      fail
      to reach agreement on the Arbitrator within ten days after a party has notified
      the other of its interest to submit a matter to arbitration, the Arbitrator
      shall be selected by the American Arbitration Association upon application
      made
      to it for such purpose by the parties. Arbitration shall take place in Dallas,
      Texas or such other place as the parties hereto may agree in writing. The
      Arbitrator shall reach and render a decision in writing with respect to the
      amount, if any, of payment respecting the disputed matter. Notwithstanding
      anything to the contrary herein, in no event will any award include
      consequential or punitive damages of any kind or nature. The arbitration
      proceedings shall be held in accordance with the applicable rules of the
      American Arbitration Association. Any award rendered shall be final and
      conclusive upon the parties and adjudgment thereon may be entered in the highest
      court of the forum, state or federal, having jurisdiction. The fees and expenses
      of the Arbitrator and the respective fees and expenses of the parties hereto
      in
      connection with any such arbitration (including, without limitation, reasonable
      fees and expenses of legal counsel and consultants) shall be paid by the party
      against whom a decision by the Arbitrator is rendered. 

    

    [Signature
      Page Follows]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    QUALIFIED
      STOCK OPTION AGREEMENT

    
      
        

      

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      first written above with the understanding that this Agreement shall constitute
      a legal, valid, binding and enforceable obligation of the Company and the
      Optionee, respectively. 

    

    
      	 	 	 
	 	MANCHESTER
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Richard
              Gaines
	 	
              
Name:
              Richard Gaines
	 	Title:  
              Corporate Secretary

    
      	 	 	 
	 	OPTIONEE
	 
 	 
 	 
 
	 	/s/    	Lawrence
              Taylor 
	 	
              

            

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    MANCHESTER
      INC. 

    

    STOCK
      OPTION AGREEMENT

    

    Notice
      of Exercise

    

    

      

      
        	
                Optionee

              	
                        
                  

              
	
                 

              	
                 

              
	
                Number
                  of Shares purchased pursuant

              
	
                to
                  Exercise of Option

              	
                       
                  

              
	
                 

              	
                 

              
	
                Exercise
                  Date

              	
                       
                  

              
	
                 

              	
                 

              
	
                Exercise
                  Price per Share

              	
                          
                  

              
	
                 

              	
                 

              
	
                Aggregate
                  Purchase Price

              	
                       
                  

              
	
                 

              	
                 

              
	
                Form
                  of Payment

              	
                              
                  

              

      

     

    By
      this
      exercise, the Optionee agrees to (i) promptly provide such additional documents
      as the Company may reasonably require and (ii) provide for the payment to the
      Company (in the manner designated by the Company) of tax withholding
      obligations, if any, relating to the exercise of this Option.

     

    
      	Optionee:
	     

    

     

    
      	 	 	 
	 	By:  	/s/ 
	 	
              
Name:
              __________________________________________
	 	Title:  
              __________________________________________

    

    

    Accepted:

    

    MANCHESTER
      INC.

    
       

      
        	 	 	 
	 	By:  	/s/ 
	 	
                
Name:
                __________________________________________
	 	Title:  
                __________________________________________

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