KEY EMPLOYEE SEVERANCE PROGRAM PARTICIPATION AGREEMENT

Exhibit 10.35

SUN-TIMES MEDIA GROUP, INC.
KEY EMPLOYEE SEVERANCE PROGRAM

PARTICIPATION AGREEMENT

          THIS AGREEMENT is entered into on January 22, 2007 by and between John J. Martin, an individual residing in the State of Illinois (“Participant”) and Sun-Times Media Group, Inc., a corporation incorporated under the laws of the State of Delaware (“STMG”).

RECITALS

Participant is an employee of Chicago Sun-Times, Inc. (the “Company”), a subsidiary of STMG. Participant has been selected to participate in the STMG Key Employee Severance Program (“KESP”) by the Compensation Committee of the STMG Board of Directors, by the full Board, or by the Chief Executive Officer of STMG. The KESP has been designed to govern the benefits to be enjoyed by Participant upon the termination of Participant’s employment by the Company under certain circumstances defined more particularly herein. A condition of participation in the KESP is the execution by Participant of a participation agreement in a form prescribed by STMG.

THEREFORE, it is hereby agreed as follows:

      1.  Termination .

	a.		Nothing in this Agreement shall limit or restrict the ability of the Company to terminate the employment of Participant, and no contract of employment is intended or created hereby or by Participant’s participation in the Program. The employment of Participant may be terminated in any of the following ways: (i) as a result of death or permanent disability of the Participant; (ii) by the Company for Cause (as defined herein), (iii) by the Participant other than for Good Reason (as defined herein), (iv) by the Company other than for Cause or as a result of death or permanent disability (a “Company Termination”), or (v) by the Participant for Good Reason (hereinafter defined) (a “Good Reason Termination”). The payments and benefits provided for in this Agreement shall be made to Participant only in the event of a Company Termination or a Good Reason Termination.
	b.		In the event of a Company Termination or a Good Reason Termination, the terminating party shall be required to provide the other party with not less than fourteen (14) calendar days’ advance written notice of termination. The Company shall have the right, in its sole discretion, to require the Participant to remain employed by the Company for a period of

up to thirty (30) days following notice of termination by either party, as a condition to Participant’s receipt of the payments and benefits provided hereunder.

      2.  Payments and Benefits Upon Termination : In the event of a Company Termination or a Good Reason Termination, the Participant shall receive the following:

	a.		A lump sum payment (payable within ten (10) days of termination) for any accrued, unused vacation time, reduced by all applicable tax withholding requirements.
	b.		A lump sum payment (payable within ten (10) days of termination) equal to the (A) higher of (i) fifty percent (50%), or (ii) the percentage derived by taking the period of January 1 through December 31 and calculating the number of days the Participant is employed by the Company during the current calendar year (to the termination date) on a percentage basis, multiplied by (B) the higher of (x) twenty-five percent (25%) of Participant’s base salary, or (y) the most recent annual bonus paid to Participant within the twelve month period preceding the date of termination; and
	c.		An amount equal to the Participant’s base salary in effect on the date of termination, payable in twenty-six (26) bi-weekly installments in the same manner that the Participant’s payroll is currently handled, less all appropriate withholding amounts and deductions; and
	d.		Continuation of all then-current benefit programs in which the Participant is entitled to participate on the date of Participant’s termination of employment, subject only to Participant’s continued premium contributions at the same level as on the date of termination. In the event that Participant is precluded by the terms of such programs or by law from participation following termination of employment, the Company shall provide an equivalent benefit in the manner it deems appropriate.

      3.  Definitions . As used in this Agreement, the following terms shall have the meanings ascribed below:

	a.		“Cause” shall mean (i) Participant engaging in intentional and willful misconduct, including a breach of the Participant’s duty of loyalty to the Company, to the detriment of the Company, or (ii) Participant being convicted of, or plea of nolo contendere to, a crime involving fraud, dishonesty, inappropriate moral standards, or violence.
	b.		“Good Reason” shall mean the occurrence of both a Change of Control and the Participant experiencing (i) a material reduction in title, authority or responsibilities, (ii) Participant being required to relocate more than fifty (50) road miles from the office where Participant currently works, or

			(iii) the failure of the Company to obtain an explicit undertaking from any successor to honor the terms of this Severance Program. For a Good Reason Termination to be valid, the affected Participant must give notice to the Company of the reasons giving rise to the Good Reason and provide the Company ten (10) days to cure said Good Reason. In addition, the Company must be notified of a Good Reason Termination within six (6) months of the effective date of the action giving rise to the cause of the Good Reason.
	c.		A “Change in Control” will be deemed to occur upon:

	1.		the acquisition after the date of this Agreement by any “person” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (excluding for this purpose, (i) STMG or any subsidiary of STMG or (ii) any employee benefit plan of STMG or of any subsidiary of STMG or any person or entity organized, appointed or established by STMG for or pursuant to the terms of any such plan which acquires after the date of this Agreement beneficial ownership of voting securities of STMG) of ownership of securities of STMG whereby such person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of STMG representing more than fifty percent (50%) of the combined voting power of STMG’s then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by STMG; or
	2.		John F. Bard, Cyrus F. Freidheim, Jr., John M. O’Brien, Gordon A. Paris, Graham W. Savage, Raymond G. H. Seitz, and Raymond S. Troubh (collectively, “Incumbent Directors”) and any new directors whose election by the Board of Directors or nomination by the Board of Directors for election by STMG’s stockholders was approved by a vote of a least two-thirds (2/3) of the directors then still in office who either are Incumbent Directors or whose election or nomination for election was previously so approved (such new directors being referred to as “Successor Incumbent Directors”) ceasing for any reason to constitute at least a majority of the Board of Directors; or
	3.		the adoption, enactment or effectiveness of any action (including, without limitation, by resolution or by amendment to STMG’s charter or bylaws) that materially limits or diminishes the power or authority of STMG’s board of directors or any committee thereof, if such action has not been approved by a vote of a least

			two-thirds (2/3) of the directors then still in office who either are Incumbent Directors or Successor Incumbent Directors; or
	4.		the consummation of, or the execution of a definitive agreement the consummation of which would