how to use UpdatePanel in an ascx control ?

I want to use UpdatePanel in my ascx control in which I have my menu like this:

<%@ Control Language="C#" AutoEventWireup="true" CodeFile="Menu.ascx.cs" Inherits="UserControls_Menu" %><%@ Register Assembly="AjaxControlToolkit" Namespace="AjaxControlToolkit"
   TagPrefix="ajaxToolkit" %><asp:ScriptManager ID="ScriptManager1" runat="server"></asp:ScriptManager><asp:UpdatePanel ID="UpdatePanel1" runat="server"><ContentTemplate><asp:Panel ID="Panel1" runat="server"><div id="mymenu"><ul><li><a href="http://www.link.com" class="current">Link1</a></li><li><a href="http://www.link.com" class="current">Link2</a></li><li><a href="http://www.link.com" class="current">Link3</a></li></ul></div><asp:UpdateProgress ID="UpdateProgress1" runat="server"><ProgressTemplate><div class="RedText"><img src="../images/Loader.gif" />
                                                                    Sending....</div></ProgressTemplate></asp:UpdateProgress></asp:Panel></ContentTemplate></asp:UpdatePanel>

I keep getting error like it requires form with runat server and then when I places a form, it gives further errors like scriptmanager cannot be used lke that.

Please help ?