Stonebridge Capital Management Inc

Item 5 – Fees and Compensation

Fee Schedule

Advisory fees for each of the investment strategies offered by us are based on all assets under
our management including cash in your portfolio that is typically invested in money-market
funds. Our fee schedule for all strategies is as follows:

       Portfolio Assets                        Annual Fee

       First $25 million                       1.00%
       Next $25 million                         .75%
       Over $50 million                         .50%

The minimum annual fee is $500.

Our fees are negotiable.

Under certain limited circumstances, we will also negotiate a fixed fee with you. In all cases,
fees are mutually agreed to by both us and you before initial billing. Fees vary substantially
among different clients depending upon the nature of the assignment, size of the portfolio to be
managed, services to be provided, and the extent of personal contact desired by the client and
may be subject to breakpoints. In some cases, certain related accounts of a client (e.g., small
IRAs or UGTMAs) are managed free of charge. We also manage accounts of our employees
and their family members free of charge. You may be able to obtain the same services as we
offer at other firms at a lower cost.

Description of Billing Practices

You may select if you want our fees to be deducted from your account at your custodian or for
us to bill you directly for our fees. The custodian will send quarterly statements showing all
transactions in the account, including fees paid to us, directly to you. We will receive either
paper or electronic copies of custodians’ statements.

We charge our fees, including fixed fees, in advance. However, in very limited circumstances,
we agree to have our fees paid in arrears. The written agreement between us sets forth the
manner in which you have agreed to pay our fees. We bill our fees quarterly. Asset-based fees
are based on the market value of the account at the end of the previous quarter. For purposes
of calculating advisory fees, the market value of the portfolio shall consist of the market value of
securities and other investments held in the account, plus any accrued income on such
investments, and will not be reduced by any margin or other indebtedness of yours with respect
to such securities or other investments. We, at our discretion, may aggregate assets of
portfolios that have a family or business relationship to each other for purposes of calculating
the advisory fee applicable to each account.

Your investment advisory agreement with us may be terminated by either you or us immediately
upon written notice. In the event that the advisory agreement is terminated for any reason, by
either party, if you are billed in advance, any unearned fee will be refunded to you based on the
time remaining in the current billing period as of the date of termination. If you are billed in
arrears, you will be billed pro-rata only for the portion of the billing period we managed your
account.

Other Fees and Expenses

In addition to our investment advisory fees, you are responsible for all brokerage and other
transaction costs, transfer taxes or other costs associated with securities transactions as well as
any custodian fees. For additional information about our brokerage practices, please see item
12. In addition, if your account is invested wholly or partially in mutual funds or other fund
shares or your uninvested assets are swept into money market mutual funds for short-term cash
management purposes, either by us or by your custodian, your account will also incur the
additional fees and expenses assessed by such funds to the extent of your investment in the
funds. Generally, no-load funds and Funds without 12b-1 fees are the preferred vehicles.

Assets invested in shares of investment companies, whether registered or unregistered are
included in calculating the value of an account for purposes of computing our fees, and the
same assets are also subject to additional advisory and other fees and expenses, as set forth in
the prospectuses or offering memoranda of those investment companies, paid by the
investment companies but ultimately borne by investors. Thus, if we invest your portfolio in
shares or units of investment companies, you will pay two management fees, one to the fund
manager and one to us. Other expenses embedded in funds include, among other things,
brokerage, accounting and legal fees. In addition, funds other than no-load funds may have

front-end or contingent deferred sales charges, early redemption fees and other fees such as
12b-1 fees or shareholder service plans. At your request, we may also invest a portion of your
portfolio in private placements, some of which may be investment companies exempt from
Company Act registration, which have imbedded advisory fees, brokerage, and other costs
similar to registered funds. When these fees are totaled, the sum can be meaningful and
adversely impact potential returns on the investment.

Item 7 – Types of Clients

We provide portfolio management services to individuals, high net worth families, pension and
profit-sharing plans, pooled-investment vehicles, charitable organizations, trusts, estates and
U.S. businesses. In the future, we may provide portfolio management services to other types of
clients.

Generally, we do not take new clients with portfolios less than $5 million. However, smaller
accounts are taken under certain circumstances such as in the case of friends or family
members of existing clients, or where substantial future additions might be made to the portfolio.