Document:

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                                                                   EXHIBIT 10.29

                            (CAPELLA UNIVERSITY LOGO)

February 21, 2006

Mr. Kenneth Sobaski
18851 Vogel Farm Trail
Eden Prairie, MN 55347

Dear Ken:

We are pleased to formally extend you this offer of employment for the position
of President and Chief Operating Officer for Capella Education Company. This is
a corporate officer position and reports to the Chairman and Chief Executive
Officer, Steve Shank. This offer is contingent upon signing a Confidentiality,
Non-Competition and Inventions Agreement, a copy of which you have received, and
the successful completion of a background check.

You will be paid on a bi-weekly basis, an amount that will equal $400,000 when
annualized. You will be eligible for a performance and salary review as of the
first pay period closest to March 1, 2007, and under normal circumstances,
annually thereafter. Capella offers a comprehensive compensation system; more
information will be provided to you after your start.

ANNUAL INCENTIVE COMPENSATION: In addition to your salary, you will be eligible
to earn an annual incentive compensation award with a target of 50% of your base
salary starting in fiscal 2006. The details of the incentive compensation
program will be specified in the annual award plan, a copy of which you have
received. Capella will guarantee payment of your first year bonus at the target
bonus of 50%, assuming you remain employed in good standing as of 12/31/2006.
The bonus amount will be calculated using the base compensation you were
actually paid during 2006. The target percentage may be subject to modification
after fiscal 2006.

SIGNING BONUS: Capella will pay you a lump sum of $60,000 (before taxes) the
first payroll period following your hire date. Should you voluntarily leave
Capella within 12 months of your hire date, for other than "Good Reason," as
defined in this letter, you agree to reimburse Capella for this payment on a
prorata basis.

BENEFIT PLANS: The following will summarize the current benefit plans, for which
you will be eligible as a full-time employee. You will be eligible to
participate in the company's benefit plans on the first day of the month
following employment, unless noted otherwise below. The terms of these benefit
plans may be subject to modification

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Ken Sobaski Offer Letter
February 21, 2006
Page 2

after fiscal 2006; however, the definitions of "Cause" and "Good Reason" as set
forth below in is letter are not subject to modification.

Medical - Effective the first day of the month following employment, you will be
eligible to participate in the company's medical plan. The plan is administered
through Medica. Medica offers you a choice of networks and/or benefit levels.
Capella will pay 100% of the full family premium for the medical coverage.

Dental - You and your family will also be eligible to participate in the
company's dental plan, administered by Delta Dental, on the first day of the
month following employment. Delta offers you a choice of networks and/or benefit
levels.

Life Insurance - The company provides paid life insurance in the amount of 1X
salary. You may also elect to purchase additional coverage for yourself, spouse
and/or dependents. You will be eligible to participate in the company's life
insurance plan on the first day of the month following employment.

Disability Benefits - The Company offers short and long-term disability
benefits. The short-term disability coverage provides salary replacement for up
to 26 weeks of disability. The amount and length of coverage is based upon
length of service with the company. There is no premium cost to you for these
disability benefits. You may elect to purchase long-term disability coverage.
The Plan replaces up to 60% of your salary as long as you are eligible for
disability benefits under the Plan. The Company pays 50% of the cost of the
long-term disability coverage plan. You will be eligible to participate in the
company's short-term disability plan on the first day of the month following
employment.

Cafeteria Plan - This plan allows you to pay for medical premiums, unreimbursed
medical and child care expenses from pre-tax dollars. You will be eligible for
this plan at the same time you are eligible for the medical insurance.

401K Retirement Plan - Under this plan, you may contribute up to 100% of your
eligible compensation, up to the IRS annual limit on deferrals and compensation.
The company will match 50% of employee contributions, up to 4% of compensation -
or, put another way, the company contributes a 2% match. There is a 5-year
vesting schedule on the employer match, with 20% of the employer contribution
vesting annually. You can begin to participate in this plan after approximately
one month of service. More specific information and details about the plan and
the investment funds will be provided in your orientation.

ESOP - The Company will also make an annual discretionary contribution to the
ESOP up to 3% of eligible compensation in the form of company stock once you are
eligible to participate. Employer contributions made in your first three years
with Capella will vest at the end of your third year of service as defined in
the Plan document. Employer contributions made after the end of your third year
of service will vest immediately. The form and amount of employer contributions
to any type of qualified retirement plan is currently under review and, while it
is our desire to offer a competitive retiree benefit

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Ken Sobaski Offer Letter
February 21, 2006
Page 3

program, there should be no expectations that future ESOP contributions will
continue in the same manner as in the past.

Stock Option Grant - You will be granted options to purchase 165,000 shares of
Capella Education Company common stock at the exercise price then in effect as
of your first day of employment. The terms of the stock option grant will be
specified in a definitive stock option agreement (the "Stock Option Agreement")
which will provide that the right to exercise options to purchase 41,250 shares
which will vest on each of your first four anniversary dates of your initial
employment with the Company.

Capella also offers an annual executive option grant award program that becomes
effective for eligible participants July 1 following two years of employment.

The specific amount of the grant is based on your position and base compensation
using a "multiple of pay" formula, and calculated using the Black Sholes
valuation based on the market price at the time of the grant. Your multiple of
pay percentage is set at 60% of base pay. The number of options is determined by
taking your salary as of June 30 (in the year the grant is awarded) multiplied
by the multiple of pay percentage. That amount is divided by the Black Sholes
valuation of the FMV of the options at the time of the grant to determine the
actual number of options that will be granted. Options granted as part of the
annual grant program vest over a 4-year period.

EXECUTIVE SEVERANCE PLAN. Capella Education Company has established the Capella
Education Company Executive Severance Plan (the "Severance Plan") to provide
severance pay and other benefits to eligible employees. Notwithstanding the
provisions of the Severance Plan, in your current position as President and
Chief Operating Officer, you will receive severance in the following amounts and
under the following circumstances: 1) 12 months total compensation (defined as
base salary plus target bonus), 2) "senior executive" outplacement services for
the full term of severance (12 months), and 3) use of laptop, cell phone, and
blackberry for term of severance or until a job is found, whichever is shorter.
You will be able to receive the above listed severance compensation if you are
terminated without cause or quit for good reason, as both are defined and
limited in this letter. You will be entitled to receive the full 12 months
compensation regardless whether you find other employment during that time and
no amount of replacement income will be set off. Capella will require any
successor to assume its obligations in this letter or will remain obligated
after any sale. Please refer to the Severance Plan document you have already
received for information on the additional provisions and conditions of the
Severance Plan. Your rights to severance as provided in this letter continue
even if the Severance Plan is changed after you sign this letter.

DEFINITION OF CAUSE: For purposes of this letter and in interpreting your rights
to severance under the Severance Plan, Incentive Compensation Plan and Stock
Incentive Plan, as well as under any Change of Control, "Cause" for termination
shall be defined and limited as follows: 1) your commission of a crime or other
act that could materially damage the reputation of Capella; 2) your theft,
misappropriation, or embezzlement of Capella property; 3) your falsification of
records maintained by Capella; 4) your failure substantially to comply with the
written policies and procedures of Capella as they may

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Ken Sobaski Offer Letter
February 21, 2006
Page 4

be published or revised from time to time (in writing, on the Faculty Center
website, or on the Stella intranet); or 5) your misconduct directed toward
learners, employees, or adjunct faculty.

DEFINITION OF GOOD REASON: "Good reason" shall be defined as "a voluntary
termination by you, whether or not preceded by a Change in Control, in any of
the following events: (i) your position is changed to a position with a lower
pay grade or lesser responsibilities than the President and Chief Operating
Officer position; (ii) your fixed compensation is decreased by more than ten
percent (10%) in any twelve (12) month period; (iii) you are reassigned to a
work location more than fifty (50) miles from the location in which you are
working immediately prior to the reassignment; or (iv) Steve Shank is no longer
CEO and you are not assigned to the CEO position.

CONFIDENTIALITY, NON-COMPETITION AND INVENTIONS AGREEMENT: With our growing
leadership position in the market, the Company has a great opportunity to build
national recognition of the Capella brand as the brand of choice in the
elearning market. However, Capella expects increasing competition from
for-profit and not for-profit organizations in the rapidly growing elearning
market. Capella believes it is essential to take certain steps, including the
execution of a Confidentiality, Non-Competition, and Inventions Agreement for
certain key positions, in order to protect the legitimate business interests of
the Company and to ensure the security and confidentiality of the company's
customers, pricing, sales strategy, and technology. Accordingly, Capella
requires as a condition of employment that candidates, such as you, for key
positions execute Confidentiality, Non-Competition and Invention Agreements.
This Agreement must be signed and dated no later than your first day of
employment.

CHANGE OF CONTROL BENEFIT: In the event of a "Change in Control" as defined in
agreements provided by Capella, you will be entitled to 2 times your normal
severance package as defined in this letter assuming an eligible severance event
occurs.

EMPLOYMENT AT WILL: Your employment will be at will. This means that either you
or Capella may terminate the employment at any time for any reason, without
advance notice.

ATTORNEYS' FEES: If either party breaches its obligations under this letter and
the referenced documents, the prevailing party shall be entitled to its costs
and reasonable attorneys' fees incurred in enforcing its rights.

OTHER BENEFITS: You will be entitled to Personal Time Off earned on a prorated
monthly basis equal to a maximum 27 days/year, in accordance with the Company
benefit statement, and 10 paid holidays. You are also eligible for paid parking
in a designated parking facility. You will also be provided a personal wireless
connectivity product such as Blackberry, which includes cell phone service.

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Ken Sobaski Offer Letter
February 21, 2006
Page 5

To the extent the specific terms of this offer letter are inconsistent with the
severance, stock incentive, and annual incentive agreements, the terms of this
offer letter supersede any such inconsistent terms and control over those
agreements.

Ken, we are delighted to be able to offer you this opportunity to join Capella.
Your education and experience are impressive and I am confident you will make a
valuable contribution to the Company's continued success.

Please sign and date below your acceptance of this offer and return in the
enclosed envelope.

Sincerely,

CAPELLA EDUCATION COMPANY

/s/ Betsy Rausch
-------------------------------------
Betsy Rausch
Vice President Human Resources

c.c Steve Shank

ACCEPTANCE: I hereby accept the offer of employment by Capella Education Company
on the terms described and as amended in this letter with additional amendments
as noted. I understand that I must sign and return to Capella the
Confidentiality, Non-Competition and Inventions Agreement provided to me with
this letter before I start my Capella employment.

/s/ Kenneth Sobaski                     2/27/06
-------------------------------------   Date
Kenneth Sobaski<PAGE>

                                                                   EXHIBIT 10.30

            CONFIDENTIALITY, NON-COMPETITION AND INVENTIONS AGREEMENT

     This Confidentiality, Non-Competition, and Inventions Agreement
("Agreement") is entered into this 27th day of February 2006 between Kenneth
Sobaski ("Employee") and Capella Education Company.

     A. Capella Education Company and its subsidiaries (including Capella
University, Inc.) are collectively referred to as "Capella" in this Agreement.

     B. Capella desires to employ Employee as President and Chief Operating
Officer, and Employee desires to be employed in that capacity.

     C. As an employee of Capella, Employee would have access to Confidential
Information (a term which is defined below).

     D. Capella provides, develops, sells, and markets on-line educational
products and services. Much of the work of Capella is done through the Internet,
which is global in coverage and can be accessed by people throughout the world.

     E. As a condition of Employee's employment by Capella, Employee and Capella
enter into this Agreement, the terms of which Employee acknowledges are
reasonable and necessary for the protection of the legitimate interests of
Capella.

                                    AGREEMENT

     In consideration of Capella's employing Employee, the parties agree as
follows:

     1. DEFINITIONS. For the purposes of this Agreement, the following terms
have the following meanings:

          a. "Capella Confidential Information" means information proprietary to
Capella and not generally known (including trade secret information) about
Capella's business, customers, learners, products, services, personnel, pricing,
sales strategy, marketing efforts, technology, methods, processes, research,
development, finances, systems, software, techniques, accounting, purchasing,
business strategies, and plans. All information disclosed to Employee or to
which Employee obtains access during Employee's Capella employment, whether
originated by Employee or by others, shall be presumed to be Capella
Confidential Information if it is treated by Capella as being Capella
Confidential Information or if Employee has a reasonable basis to believe it to
be Capella Confidential Information.

          b. "Inventions" means discoveries, improvements, ideas, concepts,
processes, formulas, methods, analyses, software, and works of authorship
(whether or not reduced to writing or put into practice, and whether or not
copyrighted, copyrightable, patented, or patentable) that (1) relate directly to
the business of Capella; (2) relate to Capella's actual or demonstrably
anticipated research or development; (3) result from any work performed by
Employee for Capella; (4) for which equipment, supplies, facilities, or trade
secret information of Capella is used; (5) are developed, created, conceived or
reduced to practice using any time for which Employee is compensated by Capella;
or (6) are developed, created, conceived, or reduced

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to practice during the period in which Employee is employed by Capella or within
one year after the termination of that employment for any reason.

          c. "Non-Assigned Inventions" means as any invention for which no
equipment, supplies, facility or trade secret information of Capella was used
and which was developed entirely on Employee's own time, and (1) which does not
relate (a) directly to the business of Capella or (b) to Capella's actual or
demonstrably anticipated research and development, or (2) which does not result
from any work performed for Capella.

          d. "Competitor" means any person, corporation, not-for-profit
organization, or other entity that provides, develops, sells, or markets on-line
credit-granting educational products or services in any country in which Capella
did business or had customers or learners at any time the last 12 months of my
Capella employment. In the case of a not-for-profit organization that provides,
develops, sells, or markets on-line credit-granting educational products or
services within or from a distinct, separate division or unit of the
organization (the "On-Line Unit") and also provides, develops, sells, or markets
credit-granting educational products or services through other means within
other distinct, separate divisions or units, the term "Competitor" shall be
limited to the On-Line Unit, and shall not apply to the organization as a whole.

     2. CONFIDENTIAL INFORMATION. Except as required in Employee's duties of
Capella employment or as authorized in writing by the Chief Executive Officer or
his designee, Employee shall not, either during the Employee's employment by
Capella or at any time thereafter, use or disclose to any person any Capella
Confidential Information for any purpose. Employee shall follow all procedures
and policies adopted by Capella from time to time regarding the treatment and
protection of Capella Confidential Information as well as the confidential
information of learners or of others.

     3. RESTRICTIONS ON COMPETITION. For a period of 12 months after the
Employee's Capella employment ends for any reason, Employee shall:

          a. inform any prospective new employer, prior to accepting employment,
of the existence of this Agreement and provide such employer a copy of this
Agreement;

          b. not, directly or indirectly, as employee, consultant, contractor or
otherwise, perform services for any Competitor; and

          c. not directly or indirectly solicit or attempt to solicit any
employee or independent contractor of Capella to cease working for Capella.

     4. INVENTIONS.

          a. With respect to Inventions developed, made, created, authored,
conceived, or reduced to practice by Employee, in whole or in part, either by
Employee or in connection with others, during Employee's employment by Capella
(regardless of whether during normal working hours or whether at Capella
premises) or within one year after the termination of that employment for any
reason, Employee shall:

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               (i) keep complete and accurate records of such Inventions, which
records shall be Capella property (except for records related solely to
Non-Assigned Inventions, which records must be kept but are not Capella
property);

               (ii) comply with all of Capella's policies and guidelines related
to inventions and copyrights, as they may be revised from time to time;

               (iii) promptly disclose in writing such Inventions to Capella;

               (iv) assign (and Employee hereby does assign) to Capella all of
Employee's rights to such Inventions (except for Non-Assigned Inventions) and to
letters patent and copyrights granted upon such Inventions (except for
Non-Assigned Inventions) in all countries; and

               (v) execute such documents and do such other acts as may be
necessary in the opinion of Capella to establish and preserve its property
rights and to obtain and maintain letters patent and copyrights in favor of
Capella.

If for any reason any such assignment is invalid or ineffective for any reason,
then Employee hereby grants Capella a perpetual, royalty-free, non-exclusive,
worldwide license fully to exploit any intellectual property or proprietary
rights in such Invention and any copyrights or patents (or other intellectual
property or proprietary registrations or applications) resulting therefrom.

          b. Capella shall compensate employees for assigning their rights in
inventions that Capella seeks to protect under patent laws in an amount not to
exceed $100 per invention (evenly allocated among all inventors).

          c. If Capella in good faith believes that any Invention constitutes a
Non-Assigned Invention, then Capella shall inform Employee of that fact within
thirty (30) days of receiving a disclosure under subparagraph a(iii) of this
Paragraph 4 (unless the parties agree on a different period of time on a
case-by-case basis). If Capella does not so notify Employee and Employee
nonetheless in good faith believes that such Invention constitutes a
Non-Assigned Invention, then Employee shall inform Capella within thirty (30)
days of the end of the period set forth in the preceding sentence, setting forth
reasons for such belief. If within thirty (30) days of Capella's receipt thereof
Capella informs Employee that it disagrees, then the parties shall attempt in
good faith to resolve their disagreement. Employee shall bear the burden of
proving that such Invention constitutes a Non-Assigned Invention.

          d. Unless proven otherwise, any Invention shall be presumed to have
been conceived during Employee's employment with Capella if within one (1) year
after termination of such employment such Invention is disclosed to others, is
completed, or has a patent application filed thereon.

          e. When developing a Capella course and/or content for a Capella
course, (i) Employee shall abide by all of the terms, conditions and policies of
Capella related to course and content development; (ii) Employee shall abide by
the terms of any separate agreement between Employee and Capella related to the
course or content development; and (iii) if Employee chooses to include or refer
to any materials for which Employee owns the copyright,

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then Employee hereby grants, and agrees to grant, to Capella a royalty-free,
perpetual, irrevocable, nonexclusive, and fully sublicensable right to use,
reproduce, adapt, publish, translate, create derivative works of, distribute,
perform, and display such materials (in whole or in part) worldwide and/or to
incorporate them in other works in any form, media, or technology now known or
later developed, solely in connection with providing the course (as the course
may be changed from time to time).

          f. Except to the degree that such materials are created in connection
with the development of course design or content, Capella does not claim the
copyrights to scholarly books or articles written by faculty members that relate
to the faculty member's area of subject matter expertise and that do not relate
to methods of course delivery or distance learning proprietary to Capella.

     5. RETURN OF PROPERTY. Upon termination of employment with Capella,
Employee shall deliver promptly to Capella all records, manuals, books, forms,
documents, letters, memoranda, data, tables, photographs, video tapes, audio
tapes, computer disks and other computer storage media, and copies thereof, that
are the property of Capella, or that relate in any way to the business,
products, services, personnel, customers, learners, practices, or techniques of
Capella, and all other property of Capella (such as, for example, computers,
cellular telephones, pagers, credit cards, and keys), whether or not containing
Confidential Information, that are in Employee' possession or under his control.

     6. REASONABLENESS OF RESTRICTIONS. Employee acknowledges and agrees that
the terms of this Agreement are reasonable and necessary for the protection of
Capella's Confidential Information and business and to prevent damage or loss to
Capella as a result of any action of Employee. Employee specifically
acknowledges and agrees that because of the world-wide coverage and
accessibility of the Internet, it is not possible to limit further the
geographic scope of the restrictions described in Paragraph 3 above in a manner
that would still provide reasonable protection for the legitimate interests of
Capella.

     7. REMEDIES FOR BREACH. Employee hereby acknowledges and agrees that any
breach by Employee of the provisions of this Agreement may cause Capella
irreparable harm for which there is no adequate remedy at law. Therefore,
Capella shall be entitled, in addition to any other remedies available, to
injunctive or other equitable relief to require specific performance or to
prevent a breach of the provisions of this Agreement. Any delay by Capella in
asserting a right under this Agreement or any failure by Capella to assert a
right under this Agreement will not constitute a waiver by Capella of any right
hereunder, and Capella may subsequently assert any or all of its rights under
this Agreement as if the delay or failure to assert rights had not occurred.

     8. NO EMPLOYMENT RIGHTS. This Agreement does not require Capella to employ
Employee for any particular length of time and does not restrict the ability of
Capella to terminate the employment relationship. Except as provided in a
separate written agreement signed by the Capella Chief Executive Officer or his
designee, Employee's Capella employment is at-will.

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     9. PARTIAL INVALIDITY. In the event that any portion of this Agreement is
held to be invalid or unenforceable for any reason, that invalidity or
unenforceability shall not affect the other portions of this Agreement and the
remaining terms and conditions, or portions thereof, shall remain in full force
and effect. A court of competent jurisdiction may so modify the objectionable
provision as to make it valid, reasonable, and enforceable. It is the intention
of the parties that the restrictions imposed by this Agreement be enforced to
the maximum permissible extent.

     10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
be enforceable by the parties hereto and their respective successors and
assigns.

     11. GOVERNING LAW. This Agreement and any disputes arising out of it shall
be governed by the laws of the State of Minnesota without regard for the
conflicts of law principles of any state.

     12. FORUM SELECTION. Any disputes arising out of or related to this
Agreement shall be litigated only in Minnesota state courts or in the United
States District Court for the District of Minnesota, and Capella and Employee
hereby consent to the exercise of personal jurisdiction over them for that
purpose by Minnesota state courts and the United States District Court for the
District of Minnesota. Neither employee nor Capella shall commence litigation
against the other arising out of or related to this Agreement in any court
outside the state of Minnesota.

                                        EMPLOYEE

                                        /s/ Kenneth Sobaski
                                        ----------------------------------------

                                        CAPELLA EDUCATION COMPANY

                                        By /s/ Betsy Rausch
                                           -------------------------------------
                                        Its VP Human Resources

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