Exhibit 10.3

THIRD AMENDMENT TO LEASE

This Third Amendment to Lease (the “Amendment” or “Third Amendment”) is entered
into effective as of June 10, 2009 (the “Effective Date”), by and between
Minneapolis 225 Holdings, LLC, a Delaware limited liability company
(“Landlord”), and Capella Education Company, a Minnesota corporation (“Tenant”).

RECITALS

A. Landlord and Tenant are parties to an Office Lease dated February 23, 2004
(the “Original Lease”), which was amended by a First Amendment to Lease dated
May 16, 2006, and a Second Amendment to Lease dated March 17, 2008 (the “Second
Amendment”) (as so previously amended the “Existing Lease” and as amended by
this Third Amendment, the “Lease”), relating to certain premises situated in the
office project now commonly known as 225 South Sixth in Minneapolis, Minnesota.

B. Landlord and Tenant now want to expand the size of the Premises on the terms
and conditions hereinafter set forth.

Accordingly, Landlord and Tenant hereby agree as follows:

1. Application of Lease Terms. Except to the extent inconsistent with this
Amendment and except to the extent that the terms of this Amendment specifically
address a topic, the terms and conditions of the Existing Lease shall apply.
Those capitalized terms which are used in this Amendment and are not defined
herein shall have the respective meaning given to them in the Existing Lease.

2. Definitions. The following definitions are hereby added alphabetically to
Section 1 of the Lease:

“15th Floor Expansion Space” means the approximately 1,133 square feet of
Rentable Area which is located on the 15th floor of the Building and which is
depicted on Exhibit U that is attached to this Third Amendment.

“15th Floor Expansion Space Delivery Date” means the date on which Landlord
delivers a fully executed copy of this Third Amendment to Tenant.

“15th Floor Expansion Space Rent Commencement Date” means September 1, 2009.

3. Addition to Premises; Declaration From and after the 15th Floor Expansion
Space Delivery Date, the 15th Floor Expansion Space shall be a part of the
Premises for all purposes of this Lease, except that Tenant shall not be
obligated to pay any Base Rent for the 15th Floor Expansion Space until the 15th
Floor Expansion Space Rent Commencement Date and Tenant shall not be obligated
to pay any Tenant’s Additional Rent for the 15th Floor Expansion Space. Landlord
shall promptly after 15th Floor Expansion Space Rent Commencement Date, prepare
a declaration (substantially in the form of Exhibit V attached hereto)
confirming the 15th Floor Expansion Space Rent Commencement Date and the other
information set forth thereon.

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Tenant shall execute and return such declaration within twenty (20) days after
submission. If Tenant fails to execute and return such declaration to Landlord
within said twenty (20) day period, Tenant shall be conclusively deemed to have
agreed that the information in the declaration is accurate and Tenant shall have
thereby waived any right to object to the accuracy of such information unless
Landlord has, during said twenty (20) day period, received a written notice from
Tenant objecting to such information and describing in detail Tenant’s reasons
for so objecting.

4. “As Is” Condition. Tenant agrees to accept the 15th Floor Expansion Space in
its “as is” condition on the date possession of such space is delivered to
Tenant. Tenant acknowledges that Landlord shall not be obligated to make any
improvements to the 15th Floor Expansion Space and that Tenant shall not be
entitled to any construction, build-out or other allowance with respect thereto.

5. Base Rent. Tenant shall pay as monthly Base Rent for the 15th Floor Expansion
Space an amount equal to one-twelfth of the product of Eight and 00/100 Dollars
($8.00) times the number of square feet of the Rentable Area of the 15th Floor
Expansion Space for the period beginning on September 1, 2009, and ending on
October 31, 2015. If Tenant extends the Lease Term, Tenant shall pay the Market
Base Rental Rate for the 15th Floor Expansion Space from and after November 1,
2015. For such purposes, the term “Market Base Rental Rate” shall mean the
amount of cash which a landlord would receive annually by then renting the 15th
Floor Expansion Space assuming the landlord to be a prudent person willing to
lease but being under no compulsion to do so, assuming the tenant to be a
prudent person willing to lease but being under no compulsion to do so, and
assuming a lease containing the same terms and provisions as those herein
contained. Market Base Rental Rate shall take into consideration all relevant
factors including the condition of the 15th Floor Expansion Space. If Landlord
and Tenant cannot agree to the Market Base Rental Rate for the 15th Floor
Expansion Space on or before the date that is thirty (30) days after Tenant
extends the Lease Term, either party may by written notice to the other initiate
the determination of such rate by arbitration in accordance with the arbitration
provisions set forth in Section 17 of Exhibit J to the Second Amendment.

6. Tenant’s Additional Rent. Tenant shall not be obligated to pay any Tenant’s
Additional Rent for the 15th Floor Expansion Space.

7. Utilities; Additional Services. Tenant shall pay for all utilities furnished
to the 15th Floor Expansion Space (including the cost of any sub-metering needed
to measure such use) and the cost of any additional services which are furnished
to the 15th Floor Expansion Space by Landlord at Tenant’s request.

8. Brokerage Commissions. Tenant warrants that it has not engaged or dealt with
any broker in connection with this Third Amendment and Tenant agrees to
indemnify, defend and hold Landlord harmless from and against any claim for
broker’s fees or finder’s fees asserted on account of any dealings with Tenant
by any broker other than those specified herein.

9. Counterparts. This Third Amendment may be executed in any number of
counterparts, all of which shall be considered one and the same Amendment, even
though all parties hereto have not signed the same counterpart. Signatures on
this Third Amendment which are transmitted by facsimile shall be valid for all
purposes. Any party shall, however, deliver an original signature for this Third
Amendment to the other party upon request.

 

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10. Reaffirmation of Lease. Except as expressly amended herein, all of the terms
and conditions of the Existing Lease remain in full force and effect.

11. Successors and Assigns. This Third Amendment shall be binding upon and be
enforceable by Landlord and Tenant and their successors and permitted assigns.

 

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IN WITNESS WHEREOF, Tenant has executed this Third Amendment to Lease to be
effective as of the date first above written.

 

TENANT:

CAPELLA EDUCATION COMPANY

a Minnesota corporation

By:  

/s/    Gregory W. Thom

Name:   Gregory W. Thom Title:   VP, General Counsel, Secretary

This is a signature page to the Third Amendment to Lease between Minneapolis 225
Holdings, LLC, a Delaware limited liability company, as Landlord, and Capella
Education Company, a Minnesota corporation, as Tenant.

 

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IN WITNESS WHEREOF, Landlord has executed this Third Amendment to Lease to be
effective as of the date first above written.

 

LANDLORD:

MINNEAPOLIS 225 HOLDINGS, LLC,

a Delaware limited liability company

By:  

/s/    Mandi Wedin

Name:   Mandi Wedin Title:   Vice President

This is a signature page to the Third Amendment to Lease between Minneapolis 225
Holdings, LLC, a Delaware limited liability company, as Landlord, and Capella
Education Company, a Minnesota corporation, as Tenant.

 

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EXHIBIT U

DEPICTION OF 15TH FLOOR EXPANSION SPACE

LOGO [g77061g79a97.jpg]

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EXHIBIT V

DECLARATION OF 15TH FLOOR

EXPANSION SPACE RENT COMMENCEMENT DATE

This Declaration is made as of             , 2009, by and between Minneapolis
225 Holdings, LLC, a Delaware limited liability company (“Landlord”), and
Capella Education Company, a Minnesota corporation (“Tenant”).

Landlord and Tenant are parties to an Office Lease dated as of February 23,
2004, which was amended by a First Amendment to Lease dated May 16, 2006, a
Second Amendment to Lease dated March 17, 2008, and a Third Amendment to Lease
dated             , 2009 (the “Third Amendment”) (as amended, the “Lease”),
relating to certain premises situated in the office project now commonly known
as 225 South Sixth in Minneapolis, Minnesota.

In accordance with Section 3 of the Third Amendment, Landlord and Tenant hereby
memorialize that:

 

  1.

The 15th Floor Expansion Space Rent Commencement Date was             , 2009.

 

  2. The Premises contain      square feet of Rentable Area as of             ,
2009.

 

TENANT:

CAPELLA EDUCATION COMPANY,

a Minnesota corporation

By:  

 

Name:  

 

Title:  

 

LANDLORD:

MINNEAPOLIS 225 HOLDINGS, LLC,

a Delaware limited liability company

By:  

 

Name:  

 

Title:  

 

 

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