New Mountain Finance AIV 1012G Registration of securities | SEC 19 May 11

Exhibit 99.1

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934, as amended.

Preliminary and Subject to Completion
Disclosure Document, dated May 19, 2011

TABLE OF CONTENTS


DEFINED TERMS		1
SELECTED FINANCIAL AND OTHER DATA		3
RISK FACTORS		5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		36
FORMATION TRANSACTIONS AND RELATED AGREEMENTS		38
BUSINESS DEVELOPMENT COMPANY AND REGULATED INVESTMENT COMPANY ELECTIONS		49
DISTRIBUTIONS		51
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		52
BUSINESS		75
PORTFOLIO COMPANIES		91
MANAGEMENT		99
PORTFOLIO MANAGEMENT		108
INVESTMENT MANAGEMENT AGREEMENT		110
ADMINISTRATION AGREEMENT		119
LICENSE AGREEMENT		120
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		121
CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS		123
DETERMINATION OF NET ASSET VALUE		125
DESCRIPTION OF AIV HOLDINGS' CAPITAL STOCK		128
REGULATION		132
SAFEKEEPING AGENT		138
BROKERAGE ALLOCATION AND OTHER PRACTICES		138
INDEX TO FINANCIAL STATEMENTS		F-1

DEFINED TERMS

In this document, unless the context otherwise requires, references to:

•: "AIV Holdings" refers to New Mountain Finance AIV Holdings Corporation, a Delaware corporation which was incorporated on March 11, 2011, of which New Mountain Guardian AIV, L.P., a Delaware limited partnership is the sole stockholder. AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company (as defined below). Upon completion of the initial public offering, AIV Holdings will own 20,221,938 common membership units of the Operating Company. AIV Holdings intends to elect to be treated as a business development company under the Investment Company Act of 1940, or the 1940 Act, prior to the completion of the initial public offering and also intends to elect to be treated, and intends to qualify annually, as a regulated investment company, or RIC, under subchapter M of the Internal Revenue Code of 1986, as amended, or the Code, commencing with its taxable year ending on December 31, 2011;
•: "New Mountain Finance" refers to New Mountain Finance Corporation, a Delaware corporation, which was incorporated on June 29, 2010 in preparation for the initial public offering. New Mountain Finance intends to elect to be treated as a business development company under the 1940 Act prior to the completion of the initial public offering and also intends to elect to be treated, and intends to qualify annually, as a RIC under subchapter M of the Code, commencing with its taxable year ending on December 31, 2011;
•: "Senior Loan Funding", or "SLF" refers to New Mountain Guardian SPV Funding, L.L.C., together with New Mountain Guardian Partners SPV Funding, L.L.C., which will merge with and into New Mountain Guardian SPV Funding, L.L.C., prior to the initial public offering. Upon the merger of these two entities, New Mountain Guardian SPV Funding, L.L.C. will be renamed New Mountain Finance SPV Funding, L.L.C.;
•: "Operating Company" refers to New Mountain Finance Holdings, L.L.C., a Delaware limited liability company, which will be the operating company for our business, and in which New Mountain Finance will acquire common membership units in connection with the initial public offering. References to the Operating Company include New Mountain Finance Holdings, L.L.C.'s wholly owned subsidiary, SLF, unless the context otherwise requires. References to the Operating Company refer to New Mountain Finance Holdings, L.L.C. without including SLF when referencing the Operating Company's common membership units, board of directors, and credit facility or leverage. Prior to changing its name to New Mountain Finance Holdings, L.L.C., the Operating Company was known as New Mountain Guardian (Leveraged), L.L.C. Upon completion of the formation transactions, the Operating Company will be the successor to the Predecessor Entities (defined below) other than New Mountain Guardian Partners, L.P.; The Operating Company intends to elect to be treated as a business development company under the 1940 Act prior to the completion of the initial public offering;
•: New Mountain Guardian (Leveraged), L.L.C., together with its direct, wholly-owned subsidiaries, New Mountain Guardian Debt Funding, L.L.C. and New Mountain Guardian SPV Funding, L.L.C. (collectively referred to as "Guardian Leveraged"), and New Mountain Guardian Partners, L.P., together with its direct and indirect wholly-owned subsidiaries, New Mountain Guardian Partners (Leveraged), L.L.C., New Mountain Guardian Partners SPV Funding, L.L.C., and New Mountain Guardian Partners Debt Funding L.L.C. (collectively referred to as "Guardian Partners"), are referred to collectively as the "Predecessor Entities";

•: "Guardian AIV" refers to New Mountain Guardian AIV, L.P., which prior to the formation transactions is the parent of Guardian Leveraged and after the formation transactions will wholly own AIV Holdings;
•: "Investment Adviser" refers to New Mountain Finance Advisers BDC, L.L.C., the Operating Company's investment adviser;
•: "Administrator" refers to New Mountain Finance's and the Operating Company's administrator, New Mountain Finance Administration, L.L.C.;
•: "New Mountain" refers to the affiliated companies of New Mountain Capital Group, L.L.C.;
•: "initial public offering" refers to the initial public offering of shares of common stock, par value $0.01, of New Mountain Finance; and
•: "Form 10" refers to the registration statement on Form 10 of AIV Holdings to which this document is filed as an exhibit.

In connection with the initial public offering, a series of formation transactions will be undertaken such that prior to the completion of the initial public offering, the Operating Company will own all of the operations of the Predecessor Entities existing immediately prior to the formation transactions, including all of the assets and liabilities related to such operations.

SELECTED FINANCIAL AND OTHER DATA

The selected combined financial and other data below reflects the combined historical operations of New Mountain Finance Holdings, L.L.C., formerly known as New Mountain Guardian (Leveraged), L.L.C., and New Mountain Guardian Partners, L.P., the assets of which will be contributed to the Operating Company in connection with the formation transactions. This combined financial and other data is the Operating Company's historical financial and other data. The Operating Company will be AIV Holdings' sole investment following the completion of the initial public offering. To date, AIV Holdings has had no operations. As described in "Formation Transactions and Related Agreements — Holding Company Structure", following the completion of the initial public offering, AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company.

We have derived the selected historical balance sheet information as of December 31, 2008, 2009 and 2010 and the selected statement of operations information for the period from October 29, 2008 (inception) through December 31, 2008 and for the years ended December 31, 2009 and 2010 from the Operating Company's audited combined financial statements included elsewhere in this document. We have derived the selected historical balance sheet information as of March 31, 2011 and the selected statement of operations information for the three months ended March 31, 2010 and 2011 from the Operating Company's unaudited combined financial statements included elsewhere in this document. The unaudited interim combined financial statements include all adjustments (consisting of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Operating Company's financial position.

The historical financial information does not reflect the allocation of certain general and administrative costs or other expenses or the impact of management fees that were incurred by affiliates of New Mountain. We expect that, following the completion of the initial public offering, our share of expenses and management fees as a stand-alone company will be higher than those historically incurred by the Operating Company. Accordingly, the historical financial information should not be relied upon as being representative of our financial position or operating results had we operated on a stand-alone basis under similar regulatory constraints, nor are they representative of our financial position or operating results following the initial public offering, at which point the Operating Company will bear the expenses of New Mountain Finance operating on a stand-alone basis. In addition, following the completion of the initial public offering, AIV Holdings will own approximately 63.6% of the common membership units of the Operating Company, assuming no exercise of the underwriters' option to purchase additional shares. Depending on AIV Holdings' ownership interest in the Operating Company, the Operating Company's results of operations may not be consolidated with AIV Holdings' results of operations in future periods. As a result, the historical and future financial information may not be representative of AIV Holdings' financial information in future periods.

The financial and other information below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Senior Securities" and

the Operating Company's combined financial statements and related notes, which are included elsewhere in this document.

	Three months ended						Year ended

	Three months ended						Year ended						Period from October 29, 2008 (inception) through December 31, 2008
	March 31, 2011 (unaudited)			March 31, 2010(2) (unaudited)			December 31, 2010			December 31, 2009
	(dollars in thousands)
Income statement data:
Total investment income	$	11,212		$	9,077		$	41,375		$	21,767		$	256
Total expenses		1,782			869			3,911			1,359			—

Net investment income		9,430			8,208			37,464			20,408			256

Realized gains on investments	$	5,892		$	20,944		$	66,287		$	37,129			—
Net change in unrealized appreciation / (depreciation) of investments		1,097			(2,806	)		(39,959	)		68,143			(1,435	)

Net increase (decrease) in net assets resulting from operations	$	16,419		$	26,346		$	63,792		$	125,680		$	(1,179	)

Other data:
Weighted average Yield to Maturity(1)		12.6	%					12.5	%		12.7	%		18.8	%
Number of portfolio companies at period end		45						43			24			6
Balance sheet data:
Total investments at fair value	$	460,021					$	441,058		$	320,523		$	61,451
Total cash and cash equivalents		27,198						10,744			4,110			189
Total assets		499,695						460,224			330,558			61,669
Borrowings outstanding		171,764						116,633			77,745
Net assets		290,198						239,441			30,354

(1): Assumes that the investments in the Operating Company's portfolio as of the Portfolio Date are purchased at fair value on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity. Also assumes that unfunded revolvers remain undrawn. Interest income is assumed to be received quarterly for all debt securities. For floating rate debt securities, the interest rate is calculated by adding the spread to the projected three-month LIBOR at each respective quarter, which is determined based on the forward three-month LIBOR curve per Bloomberg as of the Portfolio Date. This calculation excludes the impact of existing leverage, except for the non-recourse debt of SLF. SLF is treated as a fully levered asset of the Operating Company, with SLF's net asset value being included for yield calculation purposes.
(2): Historical balance sheet information as of March 31, 2010 from the Operating Company's unaudited combined financial statements is not included elsewhere in this document and therefore is not included in this table.

RISK FACTORS

Our business involves significant risks. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our net asset value could decline.

Risks Relating to Our Business

We have a limited operating history.

AIV Holdings is a newly-formed entity and the Operating Company commenced operations in October 2008. Prior to the completion of the initial public offering, the Operating Company will own all of the operations of the Predecessor Entities existing immediately prior to the formation transactions, including all of the assets and liabilities related to such operations. AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company. As a result, we will be subject to many of the business risks and uncertainties associated with any new business, including the risk that the Operating Company will not achieve its investment objective.

We do not expect to replicate the Predecessor Entities' historical performance or the historical performance of other entities managed or supported by New Mountain.

We do not expect that we will replicate the Predecessor Entities' historical performance or the historical performance of New Mountain's investments, and the Operating Company's investment returns may be substantially lower than the returns achieved by the Predecessor Entities. Although the Predecessor Entities commenced operations during otherwise unfavorable economic conditions, this was a favorable environment in which the Operating Company could conduct its business in light of its investment objectives and strategy. In addition, the Operating Company's investment strategies may differ from those of New Mountain or its affiliates. New Mountain Finance, AIV Holdings and the Operating Company, as business development companies, and AIV Holdings, as a RIC, and the Operating Company as a result of New Mountain Finance and AIV Holdings being RICs, are subject to certain regulatory restrictions that do not apply to New Mountain or its affiliates.

The Operating Company will generally not be permitted to invest in any private company in which New Mountain or any of its affiliates holds an existing investment, except to the extent permitted by the 1940 Act. This may adversely affect the pace at which the Operating Company makes investments. Moreover, we expect the Operating Company will operate with a different leverage profile than the Predecessor Entities. Furthermore, none of the prior results were from public reporting companies, and all or a portion of these results were achieved in particularly favorable market conditions for the Operating Company's investment strategy which may never be repeated. Finally, we can offer no assurance that the Operating Company's investment team will be able to continue to implement the Operating Company's investment objective with the same degree of success as it has had in the past.

There will be uncertainty as to the value of the Operating Company's portfolio investments because most of its investments are, and will continue to be in private companies and recorded at fair value. In addition, because AIV Holdings will be a holding company, its board of directors will have no control over the determinations of fair value of the Operating Company's investments, which will be determined by the Operating Company's board of directors.

Some of the Operating Company's investments are and will be in the form of securities or loans that are not publicly traded. The fair value of these investments may not be readily determinable. Under the 1940 Act, the Operating Company is required to carry its portfolio investments at market value or, if there is no readily available market value, at fair value as determined in good faith by its board of directors, including to reflect significant events affecting the value of its securities. The Operating Company will value its investments for which it does not have readily available market quotations quarterly, or more frequently as circumstances require, at fair value as determined in good faith by its board of directors in accordance with its valuation policy, which is at all times consistent with generally accepted accounting principles.

The Operating Company's board of directors expects to utilize the services of one or more independent third-party valuation firms to aid it in determining the fair value with respect to its material unquoted assets. We expect that inputs into the determination of fair value of these investments may require significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information.

The types of factors that the board of directors may take into account in determining the fair value of its investments generally include, as appropriate: available market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows and the markets in which it does business, comparisons of financial ratios of peer companies that are public, comparable merger and acquisition transactions and the principal market and enterprise values. Because these valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, the Operating Company's determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed.

Due to this uncertainty, the Operating Company's fair value determinations may cause its net asset value and, consequently, AIV Holdings' net asset value on any given date to materially understate or overstate the value that the Operating Company may ultimately realize upon the sale of one or more of its investments. Because AIV Holdings will be a holding company and its only business and sole asset immediately following the initial public offering will be its ownership of common membership units of the Operating Company, AIV Holdings' net asset value will be based on the Operating Company's valuation and its percentage interest in the Operating Company. AIV Holdings' board of directors will have no control over the determinations of fair value by the Operating Company's board of directors.

Although the Operating Company's initial board of directors will be comprised of the same individuals as AIV Holdings' board of directors, there can be no assurances that the Operating Company's board composition will remain the same as AIV Holdings. However, in the event that AIV Holdings' board of directors believes that the Operating Company's fair value determinations are inaccurate, AIV Holdings' board of directors will endeavor to discuss the differences in the

valuations with the Operating Company's board of directors for the purposes of resolving the differences in valuation. The valuation procedures of AIV Holdings will be substantially similar to those utilized by the Operating Company described above.

The Operating Company will adjust quarterly the valuation of its portfolio to reflect its board of directors' determination of the fair value of each investment in its portfolio. Any changes in fair value will be recorded in the Operating Company's statement of operations as net change in unrealized appreciation or depreciation.

The Operating Company's ability to achieve its investment objective depends on key investment personnel of the Investment Adviser. If the Investment Adviser were to lose any of its key investment personnel, the Operating Company's ability to achieve its investment objective could be significantly harmed.

The Operating Company will depend on the investment judgment, skill and relationships of the investment professionals of the Investment Adviser, particularly Steven Klinsky and Robert Hamwee, as well as other key personnel to identify, evaluate, negotiate, structure, execute, monitor and service its investments. The Investment Adviser is an affiliate of New Mountain and will be supported by New Mountain's team, which as of March 31, 2011 consisted of approximately 84 staff members, including approximately 53 investment professionals (including 14 managing directors and 13 senior advisers) as well as 16 finance and operational professionals and other resources of New Mountain and its affiliates to fulfill its obligations to the Operating Company under the Investment Management Agreement. The Investment Adviser may also depend upon New Mountain to obtain access to investment opportunities originated by the professionals of New Mountain and its affiliates. Our future success will depend to a significant extent on the continued service and coordination of the key investment personnel of the Investment Adviser. The departure of any of these individuals could have a material adverse effect on the Operating Company's ability to achieve its investment objective.

The Investment Adviser's investment committee, which provides oversight over the Operating Company's investment activities, is provided by the Investment Adviser. The Investment Adviser's investment committee currently consists of five members. The loss of any member of the Investment Adviser's investment committee or of other senior professionals of the Investment Adviser and its affiliates without suitable replacement could limit the Operating Company's ability to achieve its investment objective and operate as we anticipate. This could have a material adverse effect on our financial condition, results of operation and cash flows. To achieve the Operating Company's investment objective, the Investment Adviser may need to hire, train, supervise and manage new investment professionals to participate in its investment selection and monitoring process. If the Investment Adviser is unable to find investment professionals or do so in a timely manner, our business, financial condition and results of operations could be adversely affected.

The Investment Adviser does not have any prior experience managing a business development company or a RIC, which could adversely affect our business.

The Investment Adviser has not previously managed a business development company or a RIC. The 1940 Act and the Code impose numerous constraints on the operations of business development companies and RICs that do not apply to the other investment vehicles previously managed by the investment professionals of the Investment Adviser. For example, under the 1940 Act, business development companies are required to invest at least 70% of their total assets primarily in securities of qualifying U.S. private or thinly traded companies, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. See "Regulation". Moreover, qualification for taxation as a RIC under subchapter M of the Code requires satisfaction of source-of-income, asset diversification and annual distribution requirements.

AIV Holdings will have no assets other than its ownership of common membership units of the Operating Company and will have no material long-term liabilities. As a result, AIV Holdings will look to the Operating Company's assets and income for purposes of satisfying the requirements under the 1940 Act applicable to business development companies and the requirements under the Code applicable to RICs. The failure to comply with these provisions in a timely manner could prevent AIV Holdings and the Operating Company from qualifying as business development companies or AIV Holdings from qualifying as a RIC and could force us to pay unexpected taxes and penalties, which would have a material adverse effect on our performance. The Investment Adviser's lack of experience in managing a portfolio of assets under the constraints applicable to business development companies and RICs may hinder its ability to take advantage of attractive investment opportunities and, as a result, achieve the Operating Company's investment objective. If the Operating Company fails to maintain its status as a business development company or operate in a manner consistent with AIV Holdings' status as a RIC, its operating flexibility could be significantly reduced and AIV Holdings may be unable to maintain its status as a business development company or a RIC.

The Operating Company operates in a highly competitive market for investment opportunities and may not be able to compete effectively.

The Operating Company competes for investments with other business development companies and investment funds (including private equity funds), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of its competitors are substantially larger and have considerably greater financial, technical and marketing resources than it does. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to the Operating Company. In addition, some of the Operating Company's competitors may have higher risk tolerances or different risk assessments than the Operating Company has. Furthermore, many of the Operating Company's competitors have greater experience operating under, or are not subject to, the regulatory restrictions that the 1940 Act will impose on AIV Holdings and the Operating Company as business development companies or the source-of-income, asset diversification and distribution requirements that AIV Holdings must satisfy to obtain and maintain its RIC status. These characteristics could allow the Operating Company's competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than it is able to. There are a number of new business development companies that have recently completed their initial public offerings or that have filed registration statements with the SEC, which could create increased competition for investment opportunities.

The Operating Company may lose investment opportunities if it does not match its competitors' pricing, terms and structure. With respect to the investments the Operating Company makes, it will not seek to compete based primarily on the interest rates it will offer, and we believe that some of the Operating Company's competitors may make loans with interest rates that will be lower than the rates it offers. In the secondary market for acquiring existing loans, we expect the Operating Company to compete generally on the basis of pricing terms. If the Operating Company matches its competitors' pricing, terms and structure, it may experience decreased net interest income, lower yields and increased risk of credit loss. If the Operating Company is forced to match its competitors' pricing, terms and structure, it may not be able to achieve acceptable returns on its investments or may bear substantial risk of capital loss. Part of our competitive advantage stems from the fact that we believe the market for middle-market lending is underserved by traditional bank lenders and other financial sources. A significant increase in the number and/or the size of the Operating Company's competitors in this target market could force it to accept less attractive investment terms. The Operating Company may also compete for investment opportunities with accounts managed by the Investment Adviser or its affiliates. Although the Investment Adviser will

allocate opportunities in accordance with its policies and procedures, allocations to such other accounts will reduce the amount and frequency of opportunities available to the Operating Company and may not be in the best interests of the Operating Company. Moreover, the performance of investment opportunities will not be known at the time of allocation. See "— The Investment Adviser has significant potential conflicts of interest with AIV Holdings and the Operating Company and, consequently, Guardian AIV's interests as the sole stockholder of AIV Holdings, which could adversely impact the our investment returns" and "Certain Relationships and Related Transactions". If the Operating Company is not able to compete effectively, our business, financial condition and results of operations will be adversely affected. Because of this competition, there can be no assurance that the Operating Company will be able to identify and take advantage of attractive investment opportunities that it identifies or that it will be able to fully invest its available capital.

Our business, results of operations and financial condition will depend on the Operating Company's ability to manage future growth effectively.

The Operating Company's ability to achieve its investment objective and to grow depends on the Investment Adviser's ability to identify, invest in and monitor companies that meet the Operating Company's investment criteria. Accomplishing this result on a cost-effective basis is largely a function of the Investment Adviser's structuring of the investment process, its ability to provide competent, attentive and efficient services to the Operating Company and its ability to access financing on acceptable terms. The Investment Adviser has substantial responsibilities under the Investment Management Agreement and may also be called upon to provide managerial assistance to the Operating Company's portfolio companies. These demands on the time of the Investment Adviser and its investment professionals may distract them or slow the Operating Company's rate of investment. In order to grow, the Operating Company and the Investment Adviser may need to retain, train, supervise and manage new investment professionals. However, these investment professionals may not be able to contribute effectively to the work of the Investment Adviser. If the Operating Company is unable to manage its future growth effectively, our business, results of operations and financial condition could be materially adversely affected.

The incentive fee may induce the Investment Adviser to make speculative investments.

The incentive fee payable to the Investment Adviser may create an incentive for the Investment Adviser to pursue investments that are risky or more speculative than would be the case in the absence of such compensation arrangement, which could result in higher investment losses, particularly during cyclical economic downturns. The incentive fee payable to the Investment Adviser is calculated based on a percentage of the Operating Company's return on investment capital. This may encourage the Investment Adviser to use leverage to increase the return on the Operating Company's investments. In addition, because the base management fee is payable based upon the Operating Company's gross assets, which includes any borrowings for investment purposes, but excludes cash and cash equivalents for investment purposes, the Investment Adviser may be further encouraged to use leverage to make additional investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of AIV Holdings' common membership units of the Operating Company and, consequently, the value of AIV Holdings' common stock.

The incentive fee payable to the Investment Adviser also may create an incentive for the Investment Adviser to invest in instruments that have a deferred interest feature, even if such deferred payments would not provide the cash necessary for the Operating Company to make distributions to AIV Holdings that enable AIV Holdings to pay current distributions to Guardian AIV, its sole stockholder. Under these investments, the Operating Company would accrue the interest

over the life of the investment but would not receive the cash income from the investment until the end of the investment's term, if at all. The Operating Company's net investment income used to calculate the income portion of the incentive fee, however, includes accrued interest. Thus, a portion of the incentive fee would be based on income that the Operating Company has not yet received in cash and may never receive in cash if the portfolio company is unable to satisfy such interest payment obligations. In addition, the "catch-up" portion of the incentive fee may encourage the Investment Adviser to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting in fluctuations in timing and dividend amounts.

The Operating Company will borrow money, which could magnify the potential for gain or loss on amounts invested in us and increase the risk of investing in us.

The Operating Company intends to borrow money as part of its business plan. Borrowings, also known as leverage, magnify the potential for gain or loss on invested equity capital and may, consequently, increase the risk of investing in us. We expect the Operating Company to continue to use leverage to finance its investments, through senior securities issued by banks and other lenders. The Operating Company is restricted from incurring additional indebtedness under the Credit Facility, without lender consent. Lenders of these senior securities will have fixed dollar claims on the Operating Company's assets that will be superior to AIV Holdings' claim as a member of the Operating Company, and, consequently, superior to claims of Guardian AIV, as the sole common stockholder of AIV Holdings. If the value of the Operating Company's assets decreases, leveraging would cause its net asset value and, consequently, AIV Holdings' net asset value, to decline more sharply than it otherwise would have had it not leveraged. Similarly, any decrease in the Operating Company's income would cause its net income and consequently AIV Holdings' net income to decline more sharply than it would have had it not borrowed. Such a decline could adversely affect the Operating Company's ability to make distributions to its members. In addition, because Operating Company's investments may be illiquid, the Operating Company may be unable to dispose of them or to do so at a favorable price in the event it needs to do so if it is unable to refinance any indebtedness upon maturity and, as a result, we may suffer losses. Leverage is generally considered a speculative investment technique.

The Operating Company's ability to service any debt that it incurs will depend largely on its financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the Investment Adviser's management fee will be payable to the Investment Adviser based on gross assets, including those assets acquired through the use of leverage, the Investment Adviser may have a financial incentive to incur leverage which may not be consistent with AIV Holdings' interests. In addition, Guardian AIV, as holder of AIV Holdings' common stock will, indirectly, bear the burden of any increase in the Operating Company's expenses as a result of leverage, including any increase in the management fee payable to the Investment Adviser.

At March 31, 2011, the Predecessor Entities had $64.9 million and $106.9 million of indebtedness outstanding under the Predecessor Credit Facility and the SLF Credit Facility, respectively. The Predecessor Credit Facility had an effective annual interest rate of 3.3% for the three months ended March 31, 2011 and the SLF Credit Facility had an effective interest rate of 2.5% for the three months ended March 31, 2011. In order for the Operating Company to cover these annualized interest payments on indebtedness, it must achieve annual returns on its assets of at least 1.0% based on the amount of its assets at March 31, 2011.

New Mountain Finance and the Operating Company may need to raise additional capital to grow the Operating Company.

All of the proceeds from the initial public offering and the concurrent private placement will be contributed to the Operating Company in exchange for New Mountain Finance's acquisition of

common membership units of the Operating Company. The Operating Company may need additional capital to fund new investments and grow its portfolio of investments once the Operating Company has fully invested these proceeds. New Mountain Finance may access the capital markets periodically to issue equity securities, which would in turn increase the equity capital available to the Operating Company. In addition, the Operating Company may also issue debt securities or borrow from financial institutions in order to obtain such additional capital. AIV Holdings does not intend to raise any additional equity or debt capital. However, the Operating Company is restricted from incurring additional indebtedness under the Credit Facility, without lender consent. Under the 1940 Act, New Mountain Finance is not permitted to own any other securities other than its common membership units of the Operating Company. As a result, any proceeds from offerings by New Mountain Finance of equity securities would be contributed to the Operating Company. Unfavorable economic conditions could increase New Mountain Finance's and the Operating Company's funding costs, limit their access to the capital markets or result in a decision by lenders not to extend credit to the Operating Company. A reduction in the availability of new capital could limit the Operating Company's ability to grow. In addition, each of New Mountain Finance and AIV Holdings will be required to distribute at least 90% of its net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to their respective stockholders to obtain and maintain its RIC status. As a result, these earnings will not be available to fund new investments. If New Mountain Finance or the Operating Company is unable to access the capital markets or if the Operating Company is unable to borrow from financial institutions, the Operating Company may be unable to grow its business and execute its business strategy fully and our earnings, if any, could decrease.

If the Operating Company is unable to comply with the covenants or restrictions in the Operating Company's credit facility, our business could be materially adversely affected.

The Operating Company's credit facility (the "Credit Facility") includes covenants that, subject to certain exceptions, among other things, restrict the Operating Company's ability to dispose of assets, incur additional indebtedness, pay distributions, create liens on assets, make investments, make acquisitions and engage in mergers or consolidations. The Credit Facility also includes change of control provisions that accelerate the indebtedness under the facility in the event of certain change of control events. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — The Credit Facility". Complying with these restrictions may prevent the Operating Company from taking actions that we believe would help it to grow its business or are otherwise consistent with its investment objective. These restrictions could also limit the Operating Company's ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — The Credit Facility" for additional information regarding the Operating Company's credit arrangements. In addition, the restrictions contained in the Credit Facility could limit the Operating Company's ability to make distributions to its members in certain circumstances. This could result in Guardian AIV having to consent to be treated as if it received distributions from AIV Holdings (resulting in phantom (i.e., non-cash) taxable income to Guardian AIV) or could result in AIV Holdings failing to qualify as a RIC and thus becoming subject to corporate-level federal income tax (and any applicable state and local taxes).

The breach of any of the covenants or restrictions unless cured within the applicable grace period, would result in a default under the Credit Facility that would permit the lender to declare all amounts outstanding to be due and payable. In such an event, the Operating Company may not have sufficient assets to repay such indebtedness. As a result, any default could have serious consequences to our financial condition. An event of default or an acceleration under the Credit

Facility could also cause a cross-default or cross-acceleration of another debt instrument or contractual obligation, which would adversely impact the Operating Company's liquidity. An event of default under the Credit Facility will trigger an event of default under the SLF Credit Facility. The Operating Company may not be granted waivers or amendments to the Credit Facility if for any reason it is unable to comply with it, and the Operating Company may not be able to refinance the Credit Facility on terms acceptable to it, or at all.

If SLF is unable to comply with the covenants or restrictions in the SLF's credit facility, our business could be materially adversely affected.

The SLF's credit facility (the "SLF Credit Facility") includes covenants that, subject to exceptions, among other things, restrict SLF's ability to dispose of assets, incur additional indebtedness, pay distributions, create liens on assets, make investments, make acquisitions and engage in mergers or consolidations. The SLF Credit Facility also includes change of control provisions that accelerate the indebtedness under the facility in the event of certain change of control events. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — The SLF Credit Facility". Complying with these restrictions may prevent SLF from taking actions that we believe would help it to grow our business or are otherwise consistent with our investment objective. These restrictions could also limit SLF's ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — The SLF Credit Facility" for additional information regarding SLF's credit arrangements. In addition, the restrictions contained in the SLF Credit Facility could limit SLF's ability to make distributions to the Operating Company in certain circumstances which could limit the Operating Company's ability to make distributions to its members. This could result in Guardian AIV having to consent to be treated as if it received distributions from AIV Holdings (resulting in phantom (i.e. non-cash) taxable income to Guardian AIV) or could result in AIV Holdings failing to qualify as a RIC and thus becoming subject to corporate-level federal income tax (and any applicable state and local taxes).

The breach of any of the covenants or restrictions, unless cured within the applicable grace period, or an "Event of Default" under the Credit Facility, would result in a default under the SLF Credit Facility that would permit the lender to declare all amounts outstanding to be due and payable. In such an event, SLF may not have sufficient assets to repay such indebtedness. As a result, any default could have serious consequences for the Operating Company's results of operations and financial condition. SLF may not be granted waivers or amendments to the SLF Credit Facility if for any reason it is unable to comply with it, and SLF may not be able to refinance the SLF Credit Facility on terms acceptable to it, or at all.

The Operating Company may enter into reverse repurchase agreements, which are another form of leverage.

Subject to limitations in the Credit Facility, the Operating Company may enter into reverse repurchase agreements as part of its management of its temporary investment portfolio. Under a reverse repurchase agreement, the Operating Company will effectively pledge its assets as collateral to secure a short-term loan. Generally, the other party to the agreement makes the loan in an amount equal to a percentage of the fair value of the pledged collateral. At the maturity of the reverse repurchase agreement, the payor will be required to repay the loan and correspondingly receive back its collateral. While used as collateral, the assets continue to pay principal and interest which are for the benefit of the Operating Company.

The Operating Company's use of reverse repurchase agreements, if any, involves many of the same risks involved in its use of leverage, as the proceeds from reverse repurchase agreements generally will be invested in additional securities. There is a risk that the market value of the securities acquired with the proceeds of a reverse repurchase agreement may decline below the price of the securities that it has sold but remains obligated to repurchase under the reverse repurchase agreement. In addition, there is a risk that the market value of the securities effectively pledged by the Operating Company may decline. If a buyer of securities under a reverse repurchase agreement were to file for bankruptcy or experience insolvency, the Operating Company may be adversely affected. Also, in entering into reverse repurchase agreements, the Operating Company would bear the risk of loss to the extent that the proceeds of such agreements at settlement are more than the fair value of the underlying securities being pledged. In addition, due to the interest costs associated with reverse repurchase agreements transactions, the Operating Company's net asset value would decline, and, in some cases, we may be worse off than if such instruments had not been used.

If the Operating Company is unable to obtain additional debt financing, or if its borrowing capacity is materially reduced, our business could be materially adversely affected.

The Operating Company may want to obtain additional debt financing, or need to do so upon maturity of its Credit Facility, in order to obtain funds which may be made available for investments. The Operating Company is restricted from incurring additional indebtedness under the Credit Facility without lender consent. The revolving period under the Credit Facility ends on October 21, 2013, and the Credit Facility matures on October 21, 2015. If the Operating Company is unable to increase, renew or replace any such facility and enter into a new debt financing facility or other debt financing on commercially reasonable terms, its liquidity may be reduced significantly. In addition, if the Operating Company is unable to repay amounts outstanding under any such facilities and is declared in default or is unable to renew or refinance these facilities, it may not be able to make new investments or operate our business in the normal course. These situations may arise due to circumstances that the Operating Company may be unable to control, such as lack of access to the credit markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or the Operating Company, and could materially damage the Operating Company's business operations and, consequently, AIV Holdings' business, results of operations and financial condition.

An extended continuation of the disruption in the capital markets and the credit markets could adversely affect our business.

As a business development company, the Operating Company must maintain its ability to raise additional capital for investment purposes. If New Mountain Finance or the Operating Company is unable to access the capital markets or credit markets, the Operating Company may be forced to curtail its business operations and may be unable to pursue new investment opportunities. The capital markets and the credit markets have experienced extreme volatility in recent periods, and, as a result, there has been and will likely continue to be uncertainty in the financial markets in general. Disruptions in the capital markets increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. In addition, a prolonged period of market illiquidity may cause the Operating Company to reduce the volume of loans it originates and/or funds and adversely affect the value of its portfolio investments. Unfavorable economic conditions could also increase the Operating Company's funding costs, limit the Operating Company's access to the capital markets or result in a decision by lenders not to extend credit to the Operating Company. These events could limit the Operating Company's investment originations, limit its ability to grow and negatively impact its operating results. Ongoing disruptive conditions in the financial industry and the impact of new legislation in

response to those conditions could restrict the Operating Company's business operations and, consequently, could adversely impact AIV Holdings' business, results of operations and financial condition.

If the fair value of the Operating Company's assets declines substantially, it may fail to maintain the asset coverage ratios imposed upon it by the 1940 Act and contained in its Credit Facility. Any such failure would affect the Operating Company's ability to issue senior securities, including borrowings, draw on its Credit Facility and pay distributions, which could materially impair its business operations. The Operating Company's liquidity could be impaired further by the Operating Company's inability to access the capital markets or credit markets. For example, we cannot be certain that the Operating Company will be able to renew its credit facilities as they mature or to consummate new borrowing facilities to provide capital for normal operations, including new originations. Reflecting concern about the stability of the financial markets, many lenders and institutional investors have reduced or ceased providing funding to borrowers. This market turmoil and tightening of credit have led to increased market volatility and widespread reduction of business activity generally. In addition, adverse economic conditions due to these disruptive conditions could materially impact the Operating Company's ability to comply with the financial and other covenants in any existing or future credit facilities. If the Operating Company is unable to comply with these covenants, its business could be materially adversely affected, which could, as a result, materially adversely affect AIV Holdings' business, results of operations and financial condition.

Changes in interest rates may affect the Operating Company's cost of capital and net investment income.

To the extent the Operating Company borrows money to make investments, the Operating Company's net investment income will depend, in part, upon the difference between the rate at which it borrows funds and the rate at which it invests those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on the Operating Company's net investment income in the event it uses debt to finance its investments. In periods of rising interest rates, the Operating Company's cost of funds would increase, which could reduce its net investment income. We expect that the Operating Company's long-term fixed-rate investments will be financed primarily with proceeds of issuances of equity by New Mountain Finance and long-term debt securities by the Operating Company. The Operating Company may use interest rate risk management techniques in an effort to limit its exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.

Because the Operating Company intends to make distributions to its members that will be sufficient to enable New Mountain Finance to obtain and maintain its status as a RIC, and because each of New Mountain Finance and AIV Holdings intend to distribute substantially all of their income to their respective stockholders, the Operating Company will continue to need additional capital to finance its growth. If additional funds are unavailable or not available on favorable terms, the Operating Company's ability to grow will be impaired.

The Operating Company intends to make distributions to its members that will be sufficient to enable New Mountain Finance to obtain and maintain its status as a RIC, and each of New Mountain Finance and AIV Holdings will be required to distribute at least 90% of its net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to its stockholders to obtain and maintain its RIC status. As a result of these requirements, the Operating Company will likely need to raise capital from other sources to grow its business.

As a business development company, the Operating Company generally will be required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which includes all of the Operating Company's borrowings and any outstanding preferred membership units, of at least 200%. The Operating Company will consolidate the assets and liabilities of SLF for the purposes of its financial statements and calculating compliance with the 200% asset coverage ratio. Because AIV Holdings will initially have no assets other than its ownership of common membership units of the Operating Company and will have no material long-term liabilities, AIV Holdings will look to the Operating Company's assets for purposes of satisfying this test. These requirements limit the amount that the Operating Company may borrow. Because the Operating Company will continue to need capital to grow its investment portfolio, these limitations may prevent the Operating Company from incurring debt. While we expect the Operating Company will be able to borrow and to issue additional debt securities and expect that New Mountain Finance will be able to issue additional equity securities, which would in turn increase the equity capital available to the Operating Company, we cannot assure you that debt and equity financing will be available to New Mountain Finance or the Operating Company on favorable terms, or at all. In addition, as a business development company, New Mountain Finance generally will not be permitted to issue equity securities priced below net asset value without stockholder approval. AIV Holdings does not intend to raise any additional debt or equity capital. If additional funds are not available to New Mountain Finance or the Operating Company, the Operating Company could be forced to curtail or cease new investment activities, and the Operating Company's net asset value and, consequently, AIV Holdings' net asset value, could decline.

Our ability to enter into transactions with our affiliates is restricted.

As business development companies, AIV Holdings and the Operating Company will be prohibited under the 1940 Act from participating in certain transactions with their respective affiliates without the prior approval of their respective independent directors and, in some cases, the SEC. Guardian AIV and any person that indirectly owns 5% or more of AIV Holdings' outstanding voting securities will be AIV Holdings' and the Operating Company's affiliate for purposes of the 1940 Act. AIV Holdings and the Operating Company will generally be prohibited from buying or selling any securities (other than their respective securities) from or to an affiliate. The 1940 Act also prohibits certain "joint" transactions with an affiliate, which could include investments in the same portfolio company (whether at the same or different times), without prior approval of independent directors and, in some cases, the SEC. Similar restrictions limit AIV Holdings' and the Operating Company's ability to transact business with their respective officers or directors or their affiliates. As a result of these restrictions, the Operating Company may be prohibited from buying or selling any security from or to any portfolio company of a private equity fund managed by any affiliate of the Investment Adviser without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to the Operating Company.

New Mountain Finance, AIV Holdings and the Operating Company expect to file applications with the SEC requesting exemptive relief from certain provisions of the 1940 Act and the Securities Exchange Act of 1934.

New Mountain Finance, AIV Holdings and the Operating Company expect to file an application with the SEC requesting an order exempting them from certain reporting requirements mandated by the Securities Exchange Act of 1934, or the Exchange Act. If this relief under the Exchange Act is granted, AIV Holdings and the Operating Company would be exempt from the reporting obligations under the Exchange Act. However, New Mountain Finance would continue to be required to file these reports which would include disclosure with respect to the Operating Company. There may be delays and costs involved in obtaining this relief, and there is no assurance that the application

for exemptive relief will be granted by the SEC. New Mountain Finance and the Operating Company also intend to seek exemptive relief to permit the Operating Company to pay 50% of the incentive fee payable to the Investment Adviser in common membership units of the Operating Company, which will be exchangeable into shares of New Mountain Finance's common stock and there is no assurance that the application for exmptive relief will be granted by the SEC. See " — The Operating Company's ability to pay 50%, on an after-tax basis, of the incentive fee to the Investment Adviser in common membership units of the Operating Company is contingent on receipt of exemptive relief from the SEC".

The Investment Adviser has significant potential conflicts of interest with AIV Holdings and the Operating Company and, consequently, Guardian AIV's interests as the sole stockholder of AIV Holdings, which could adversely impact our investment returns.

AIV Holdings' and the Operating Company's executive officers and directors, as well as the current or future investment professionals of the Investment Adviser, serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by AIV Holdings' and the Operating Company's affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in Guardian AIV's interests as the sole stockholder of AIV Holdings. Although the Operating Company is currently New Mountain's only vehicle focused primarily on investing in the Target Securities, in the future, the investment professionals of the Investment Adviser and/or New Mountain employees that provide services pursuant to the Investment Management Agreement may manage other funds which may from time to time have overlapping investment objectives with the Operating Company's and, accordingly, may invest in, whether principally or secondarily, asset classes similar to those targeted by the Operating Company. If this occurs, the Investment Adviser may face conflicts of interest in allocating investment opportunities to the Operating Company and such other funds. Although the investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that the Operating Company may not be given the opportunity to participate in certain investments made by the Investment Adviser or persons affiliated with the Investment Adviser or that certain of these investment funds may be favored over the Operating Company. When these investment professionals identify an investment, they will be forced to choose which investment fund should make the investment.

If the Investment Adviser forms other affiliates in the future, the Operating Company may co-invest on a concurrent basis with such other affiliate, subject to compliance with applicable regulations and regulatory guidance or an exemptive order from the SEC and the Operating Company's allocation procedures. In addition, the Operating Company pays management and incentive fees to the Investment Adviser and reimburses the Investment Adviser for certain expenses it incurs. Also, the incentive fee payable to the Investment Adviser may create an incentive for the Investment Adviser to pursue investments that are riskier or more speculative than would be the case in the absence of such compensation arrangements. Any potential conflict of interest arising as a result of the arrangements with the Investment Adviser could have a material adverse effect on our business, results of operations and financial condition.

The incentive fee the Operating Company pays to the Investment Adviser in respect of capital gains may be effectively greater than 20%.

As a result of the operation of the cumulative method of calculating the capital gains portion of the incentive fee the Operating Company will pay to the Investment Adviser, the cumulative aggregate capital gains fee received by the Investment Adviser could be effectively greater than 20%, depending on the timing and extent of subsequent net realized capital losses or net unrealized depreciation. For additional information on this calculation, see the disclosure in

footnote 1 to Example 2 under the caption "Investment Management Agreement — Overview of the Investment Adviser — Management Fee — Incentive Fee."

The Investment Adviser's investment committee, the Investment Adviser or its affiliates may, from time to time, possess material non-public information, limiting the Operating Company's investment discretion.

The Investment Adviser's investment professionals, investment committee or their respective affiliates may serve as directors of, or in a similar capacity with, companies in which we invest through the Operating Company, the securities of which are purchased or sold on the Operating Company's behalf. In the event that material non-public information is obtained with respect to such companies, or we became subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, the Operating Company could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on the Operating Company and, consequently, the interests of Guardian AIV, as sole stockholder of AIV Holdings.

The valuation process for certain of the Operating Company's portfolio holdings creates a conflict of interest.

Some of the Operating Company's portfolio investments are expected to be made in the form of securities that are not publicly traded. As a result, the Operating Company's board of directors will determine the fair value of these securities in good faith. In connection with this determination, investment professionals from the Investment Adviser may provide the Operating Company's board of directors with portfolio company valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company. In addition, Steven Klinsky, a member of AIV Holdings' and the Operating Company's board of directors, has an indirect pecuniary interest in the Investment Adviser. The participation of the Investment Adviser's investment professionals in the Operating Company's valuation process, and the indirect pecuniary interest in the Investment Adviser by a member of AIV Holdings' and the Operating Company's board of directors, could result in a conflict of interest as the Investment Adviser's management fee is based, in part, on the Operating Company's gross assets and incentive fees will be based, in part, on unrealized gains and losses.

Conflicts of interest may exist related to other arrangements with the Investment Adviser or its affiliates.

The Operating Company has entered into a royalty-free license agreement with New Mountain under which New Mountain has agreed to grant the Operating Company a non-exclusive, royalty-free license to use the name "New Mountain". See "License Agreement". In addition, the Operating Company will reimburse the Administrator for the allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to New Mountain Finance and the Operating Company under the Administration Agreement, such as rent and the allocable portion of the cost of New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer and their respective staffs. This could create conflicts of interest that the board of directors for the Operating Company must monitor.

The Investment Management Agreement with the Investment Adviser and the Administration Agreement with the Administrator were not negotiated on an arm's length basis.

The Investment Management Agreement and the Administration Agreement were negotiated between related parties. In addition, the Operating Company may choose not to enforce, or to enforce less vigorously, their respective rights and remedies under these agreements because of its

desire to maintain its ongoing relationship with the Investment Adviser, the Administrator and their respective affiliates.

The Investment Adviser's liability will be limited under the Investment Management Agreement, and the Operating Company has agreed to indemnify the Investment Adviser against certain liabilities, which may lead the Investment Adviser to act in a riskier manner than it would when acting for its own account.

Under the Investment Management Agreement, the Investment Adviser will not assume any responsibility other than to render the services called for under that agreement, and it will not be responsible for any action of the Operating Company's board of directors in following or declining to follow the Investment Adviser's advice or recommendations. Under the terms of the Investment Management Agreement, the Investment Adviser, its officers, members, personnel, any person controlling or controlled by the Investment Adviser will not be liable to AIV Holdings, the Operating Company, any of their subsidiaries or any of their respective directors, members or stockholders or any subsidiary's stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Management Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of the Investment Adviser's duties under the Investment Management Agreement. In addition, the Operating Company has agreed to indemnify the Investment Adviser and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with its business and operations or any action taken or omitted pursuant to authority granted by the Investment Management Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person's duties under the Investment Management Agreement. These protections may lead the Investment Adviser to act in a riskier manner than it would when acting for its own account.

The Investment Adviser can resign upon 60 days' notice, and a suitable replacement may not be found within that time, resulting in disruptions in the Operating Company's operations that could adversely affect our business, results of operations and financial condition.

Under the Investment Management Agreement, the Investment Adviser has the right to resign at any time upon 60 days' written notice, whether a replacement has been found or not. If the Investment Adviser resigns, the Operating Company may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If a replacement is not able to be found on a timely basis, our business, results of operations and financial condition and the Operating Company's ability to pay distributions are likely to be materially adversely affected. In addition, if the Operating Company is unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Investment Adviser and its affiliates, the coordination of its internal management and investment activities is likely to suffer. Even if the Operating Company is able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with the Operating Company's investment objective may result in additional costs and time delays that may materially adversely affect our business, results of operations and financial condition.

The Administrator can resign from its role as Administrator under the Administration Agreement, and a suitable replacement may not be found, resulting in disruptions that could adversely affect our business, results of operations and financial condition.

The Administrator has the right to resign under the Administration Agreement upon 60 days' written notice, whether a replacement has been found or not. If the Administrator resigns, it may be difficult to find a new administrator or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms, or at all. If a replacement is not found quickly, our business, results of operations and financial condition as well as the Operating Company's ability to pay distributions are likely to be adversely affected. In addition, the coordination of New Mountain Finance's and the Operating Company's internal management and administrative activities is likely to suffer if they are unable to identify and reach an agreement with a service provider or individuals with the expertise possessed by the Administrator. Even if a comparable service provider or individuals to perform such services are retained, whether internal or external, their integration into the Operating Company's business and lack of familiarity with the Operating Company's investment objective may result in additional costs and time delays that may materially adversely affect our business, results of operations and financial condition.

If AIV Holdings and the Operating Company fail to maintain their status as business development companies, our business and operating flexibility could be significantly reduced.

AIV Holdings and the Operating Company intend to qualify as business development companies under the 1940 Act immediately prior to the completion of the initial public offering. The 1940 Act imposes numerous constraints on the operations of business development companies. For example, business development companies are required to invest at least 70% of their total assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. Failure to comply with the requirements imposed on business development companies by the 1940 Act could cause the SEC to bring an enforcement action against AIV Holdings or the Operating Company and/or expose AIV Holdings or the Operating Company to claims of private litigants. In addition, upon approval of a majority of AIV Holdings stockholders, or, in the Operating Company's case, a majority of its members voting on a pass through basis, AIV Holdings or the Operating Company may elect to withdraw their respective election as a business development company. If AIV Holdings or the Operating Company decide to withdraw their election, or if AIV Holdings or the Operating Company otherwise fail to qualify, or maintain their qualification, as a business development company, AIV Holdings or the Operating Company may be subject to the substantially greater regulation under the 1940 Act as a closed-end investment company. Compliance with these regulations would significantly decrease our operating flexibility and could significantly increase our cost of doing business. For additional information on the qualification requirements of a business development company, see the disclosure under the caption "Regulation."

If the Operating Company does not invest a sufficient portion of its assets in qualifying assets, it could be precluded from investing in certain assets or could be required to dispose of certain assets, which could have a material adverse effect on our business, financial condition and results of operations.

As a business development company, the Operating Company will be prohibited from acquiring any assets other than "qualifying assets" unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. As of March 31, 2011, approximately $23.2 million, or approximately 4.6%, of the Operating Company's total assets were not "qualifying assets." We may acquire in the future other investments that are not "qualifying

assets" to the extent permitted by the 1940 Act. If the Operating Company does not invest a sufficient portion of its assets in qualifying assets, it would be prohibited from investing in additional assets, which could have a material adverse effect on our business, financial condition and results of operations. Similarly, these rules could prevent the Operating Company from making follow-on investments in existing portfolio companies (which could result in the dilution of its position) or could require the Operating Company to dispose of investments at inopportune times in order to come into compliance with the 1940 Act. If the Operating Company needs to dispose of these investments quickly, it may be difficult to dispose of such investments on favorable terms. For example, the Operating Company may have difficulty in finding a buyer and, even if a buyer is found, it may have to sell the investments at a substantial loss.

The Operating Company's ability to invest in public companies may be limited in certain circumstances.

To maintain the Operating Company's status, and consequently, AIV Holdings' status as business development companies, the Operating Company is not permitted to acquire any assets other than "qualifying assets" specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of its total assets are qualifying assets (with certain limited exceptions). Subject to certain exceptions for follow-on investments and distressed companies, an investment in an issuer that has outstanding securities listed on a national securities exchange may be treated as qualifying assets only if such issuer has a common equity market capitalization that is less than $250 million at the time of such investment.

Regulations governing the operations of business development companies will affect New Mountain Finance's ability to raise additional equity capital as well as the Operating Company's ability to issue senior securities or borrow for investment purposes, any or all of which could have a negative effect on the Operating Company's investment objectives and strategies.

The Operating Company's business will require a substantial amount of capital in addition to the proceeds of the initial public offering and the concurrent private placement. The Operating Company may acquire additional capital from the issuance of senior securities, including borrowing or other indebtedness. In addition, New Mountain Finance may also issue additional equity capital, which would in turn increase the equity capital available to the Operating Company. Under the 1940 Act, New Mountain Finance is not permitted to own any other securities other than common membership units of the Operating Company. As a result, any proceeds from offerings of New Mountain Finance's equity securities would be contributed to the Operating Company and subsequently used by the Operating Company for investment purposes. However, New Mountain Finance and the Operating Company may not be able to raise additional capital in the future on favorable terms or at all.

The Operating Company may issue debt securities, other evidences of indebtedness or preferred membership units, and it may borrow money from banks or other financial institutions, which we refer to collectively as "senior securities", up to the maximum amount permitted by the 1940 Act. The 1940 Act permits the Operating Company to issue senior securities in amounts such that its asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of senior securities. The Operating Company will consolidate the assets and liabilities of SLF for purposes of its financial statements and calculating compliance with the 200% asset coverage ratio. If the Operating Company's asset coverage ratio were not at least 200%, it would be unable to issue senior securities, and if it had senior securities outstanding (other than any indebtedness issued in consideration of a privately arranged loan, such as any indebtedness outstanding under the Credit Facility or the SLF Credit Facility), it would be unable to make distributions to its

members, and, consequently, AIV Holdings would be unable to pay dividends. However, at March 31, 2011, the only senior securities outstanding were indebtedness under the Predecessor Credit Facility and the SLF Credit Facility and therefore at March 31, 2011, the Operating Company would not have been precluded from paying distributions. If the value of the Operating Company's or SLF's assets declines, the Operating Company or SLF may be unable to satisfy this test. If that happens, the Operating Company may be required to liquidate a portion of its investments and repay a portion of its indebtedness at a time when such sales may be disadvantageous.

The Credit Facility matures on October 21, 2015 and permits borrowings of $160 million. The Predecessor Credit Facility had $64.9 million in debt outstanding as of March 31, 2011. The SLF Credit Facility matures on October 27, 2015 and permits borrowings of $150 million. The SLF Credit Facility had $106.9 million in debt outstanding as of March 31, 2011.

In addition, the Operating Company may in the future seek to securitize other portfolio securities to generate cash for funding new investments. To securitize loans, the Operating Company would likely create a wholly-owned subsidiary and contribute a pool of loans to the subsidiary. The Operating Company would then sell interests in the subsidiary on a non-recourse basis to purchasers and it would retain all or a portion of the equity in the subsidiary. If the Operating Company is unable to successfully securitize its loan portfolio, which must be done in compliance with the relevant restrictions in the Credit Facility, its ability to grow its business or fully execute its business strategy could be impaired and our earnings, if any, could decrease. The securitization market is subject to changing market conditions and the Operating Company may not be able to access this market when it would otherwise deem appropriate. Moreover, the successful securitization of the Operating Company's portfolio might expose it to losses as the residual investments in which it does not sell interests will tend to be those that are riskier and more apt to generate losses. The 1940 Act also may impose restrictions on the structure of any securitization.

New Mountain Finance may also obtain capital for use by the Operating Company through the issuance of additional equity capital, which would in turn increase the equity capital available to the Operating Company. As a business development company, New Mountain Finance generally is not able to issue or sell its common stock at a price below net asset value per share. If New Mountain Finance's common stock trades at a discount to its net asset value per share, this restriction could adversely affect its ability to raise equity capital. New Mountain Finance may, however, sell its common stock, or warrants, options or rights to acquire its common stock, at a price below its net asset value per share of the common stock if its board of directors and independent directors determine that such sale is in its best interests and the best interests of its stockholders, and its stockholders approve such sale. In any such case, the price at which New Mountain Finance's securities are to be issued and sold may not be less than a price that, in the determination of New Mountain Finance's board of directors, closely approximates the market value of such securities (less any underwriting commission or discount). If New Mountain Finance raises additional funds by issuing more shares of its common stock or if the Operating Company issues senior securities convertible into, or exchangeable for, New Mountain Finance common stock, the percentage ownership of AIV Holdings in the Operating Company may decline. Any proceeds from the issuance of additional shares of New Mountain Finance's common stock would be contributed to the Operating Company and used to purchase, on a one-for-one basis, additional common membership units of the Operating Company.

The Operating Company's ability to pay 50%, on an after tax basis, of the incentive fee to the Investment Adviser in common membership units of the Operating Company is contingent on receipt of exemptive relief from the SEC.

Pursuant to the Investment Management Agreement with the Investment Adviser, the Operating Company has agreed, to the extent permissible, to pay 50%, on an after tax basis, of the

incentive fee in common membership units of the Operating Company having a total net asset value equal to the amount of the incentive fee, which common memberships units will be exchangeable into shares of New Mountain Finance's common stock on a one-for-one basis. Under the 1940 Act, the Operating Company is prohibited from issuing common membership units for services unless and until it obtains from the SEC an exemptive order permitting such practice. The Operating Company will apply for an exemptive order from the SEC to permit the Operating Company to pay 50%, on an after tax basis, of the incentive fee to the Investment Adviser by issuing common membership units to the Investment Adviser. The SEC is not obligated to grant an exemptive order to allow this practice and will do so only if it determines that such practice is consistent with stockholder and member interests and does not involve overreaching by the Operating Company's management or board of directors. In addition, Section 16 of the Exchange Act imposes short swing profit liability on directors, officers and 10 percent owners of securities who purchase and sell those securities within a six-month period. In order to avoid potential short-swing profit liability as a result of receiving its incentive fee in common membership units, New Mountain Finance and the Operating Company will also apply for an exemptive order to treat the receipt of such common membership units and any common stock received upon exchange of such common membership units as an exempt purchase under Section 16 of the Exchange Act. The SEC is not obligated to grant such an order and there can be no assurance they will do so. If both forms of exemptive relief are not granted, the Operating Company will pay the entire incentive fee in cash, which would reduce the amount of cash available for the Operating Company to use for additional investments. This could, in turn, require the Operating Company to forego otherwise attractive investment opportunities.

The Operating Company's business model in the future may depend to an extent upon its referral relationships with private equity sponsors, and the inability of the investment professionals of the Investment Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect its business strategy.

If the investment professionals of the Investment Adviser fail to maintain existing relationships or develop new relationships with other sponsors or sources of investment opportunities, the Operating Company will not be able to grow its investment portfolio. In addition, individuals with whom the investment professionals of the Investment Adviser have relationships are not obligated to provide the Operating Company with investment opportunities, and, therefore, there is no assurance that any relationships they currently or may in the future have will generate investment opportunities for the Operating Company.

We may experience fluctuations in our annual and quarterly results due to the nature of our business.

We could experience fluctuations in our annual and quarterly operating results due to a number of factors, some of which are beyond our control, including the ability or inability of the Operating Company to make investments in companies that meet its investment criteria, the interest rate payable on the debt securities acquired and the default rate on such securities, the level of the Operating Company's expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Operating Company encounters competition in the markets in which it operates and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

The Operating Company's board of directors may change its investment objective, operating policies and strategies without prior notice or member approval, the effects of which may be adverse to the interest of Guardian AIV, as our sole stockholder.

The Operating Company's board of directors has the authority, except as otherwise provided in the 1940 Act, to modify or waive certain of its operating policies and strategies without prior notice and without member approval. As a result, the Operating Company's board of directors will be able to change its investment policies and objectives without any input from AIV Holdings and Guardian AIV. However, absent member approval, voting on a pass through basis, the Operating Company may not change the nature of its business so as to cease to be, or withdraw its election as, a business development company. Under Delaware law and the LLC Agreement, the Operating Company also cannot be dissolved without prior member approval, voting on a pass through basis. Following the completion of the initial public offering, AIV Holdings will collectively own approximately 63.6% of the common membership units of the Operating Company, assuming no exercise of the underwriters' option to purchase additional shares. We cannot predict the effect any changes to the Operating Company's current operating policies and strategies would have on our business and operating results. Nevertheless, any such changes could adversely affect our business and impair the Operating Company's ability to make distributions to its members, and, consequently, AIV Holdings' ability to make distributions to Guardian AIV, its sole stockholder.

AIV Holdings will be subject to corporate-level federal income tax on all of its income if it is unable to qualify as a RIC under Subchapter M of the Code, which would have a material adverse effect on its financial performance.

Although AIV Holdings intends to elect to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code, commencing with its taxable year ending December 31, 2011, no assurance can be given that AIV Holdings will be able to qualify for and maintain RIC status. To obtain and maintain RIC status and be relieved of federal income taxes on income and gains distributed to Guardian AIV, its sole stockholder, AIV Holdings must meet the annual distribution, source-of-income and asset diversification requirements described below. However, AIV Holdings will have no assets immediately following the initial public offering, other than its direct ownership of common membership units of the Operating Company, and no source of cash flow, other than distributions from the Operating Company. Accordingly, AIV Holdings will look to the assets and income of the Operating Company, and will rely on the distributions made by the Operating Company to its members, for purposes of satisfying these requirements.

•: The annual distribution requirement for a RIC will be satisfied if AIV Holdings distributes to Guardian AIV, its sole stockholder, on an annual basis at least 90% of its net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Under certain circumstances, the distributions that the Operating Company makes to its members may not be sufficient for AIV Holdings to satisfy the annual distribution requirement. In that case, it is expected that Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement. This would result in phantom (i.e., non-cash) taxable income to Guardian AIV. Because the Operating Company and SLF intend to use debt financing, the Operating Company is expected to be subject to an asset coverage ratio requirement under the 1940 Act, and the Operating Company and SLF are expected to be subject to certain financial covenants contained in the Credit Facility, the SLF Credit Facility and other debt financing agreements (as applicable). This asset coverage ratio requirement and these financial covenants could, under certain circumstances, restrict SLF from making distributions to the Operating Company, and/or restrict the Operating Company from making distributions to its members, which distributions are necessary for AIV Holdings to satisfy the distribution requirement. If the Operating Company is unable to obtain cash from other

sources, and thus is unable to make sufficient distributions to its members, Guardian AIV might have to consent to be treated as if it received distributions from AIV Holdings or AIV Holdings could fail to qualify for RIC tax treatment and thus become subject to corporate-level federal income tax (and any applicable state and local taxes).

•: The source-of-income requirement will be satisfied if at least 90% of AIV Holdings' allocable share of the Operating Company's gross income for each year is derived from dividends, interest, gains from the sale of stock or securities or similar sources.
•: The asset diversification requirement will be satisfied if AIV Holdings meets certain asset diversification requirements at the end of each quarter of its taxable year. To satisfy this requirement, at least 50% of the value of AIV Holdings' assets must consist of cash, cash equivalents, U.S. government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the value of AIV Holdings' assets can be invested in the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by it and that are engaged in the same or similar or related trades or businesses or of certain "qualified publicly traded partnerships". Failure to meet these requirements may result in the Operating Company having to dispose of certain investments quickly in order to prevent the loss of AIV Holdings' RIC status. Because most of our investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Although there is no authority directly applicable to AIV Holdings and thus the matter is not free from doubt, it is expected that AIV Holdings will be treated as if it directly invested in its pro rata share of the Operating Company's assets for purposes of satisfying the asset diversification requirement. However, there can be no assurance that the IRS will not successfully assert that AIV Holdings does not meet the asset diversification requirement because it is unable to look to the Operating Company's assets for purpose of that requirement. In that case, AIV Holdings would fail to qualify as a RIC and thus become subject to corporate-level federal income tax (and any applicable state and local taxes).

If AIV Holdings fails to qualify for or maintain its RIC status for any reason and AIV Holdings does not qualify for certain relief provisions under the Code, AIV Holdings would be subject to corporate-level federal income tax (and any applicable state and local taxes). In this event, the resulting taxes could substantially reduce AIV Holdings' net assets, the amount of income available for distribution and the amount of its distributions, which would have a material adverse effect on its financial performance.

AIV Holdings may not be able to pay distributions on its common stock to Guardian AIV, its sole stockholder, and its distributions may not grow over time.

AIV Holdings intends to pay quarterly distributions to Guardian AIV, its sole stockholder, out of assets legally available for distribution. There is no assurance that we will achieve investment results that will allow AIV Holdings to make a specified level of cash distributions or year-to-year increases in cash distributions. If the Operating Company is unable to satisfy the asset coverage test applicable to it as a business development company, or if it violates certain covenants under the Credit Facility, the Operating Company's ability to pay distributions to its members could be limited, thereby limiting AIV Holdings' ability to pay distributions to Guardian AIV. All distributions will be paid at the discretion of the Operating Company's board of directors and will depend on its earnings, financial condition, maintenance of New Mountain Finance's RIC status, compliance with applicable business development company regulations, compliance with covenants under the Credit Facility, and such other factors as the Operating Company's board of directors may deem relevant from time to time. The distributions AIV Holdings pays to Guardian AIV in a year may

exceed its taxable income for that year and, accordingly, a portion of such distributions may constitute a return of capital for federal income tax purposes.

In addition, because AIV Holdings will be a holding company, AIV Holdings will only be able to pay distributions from distributions received from the Operating Company. The Operating Company intends to make distributions to its members that will be sufficient to enable New Mountain Finance to pay quarterly distributions to its stockholders and to obtain and maintain its status as a RIC. However, there can be no assurances that the Operating Company will make distributions to its members (including AIV Holdings) in the future. Accordingly, there is no assurance that AIV Holdings will pay distributions in the future.

If the Operating Company recognizes taxable income before or without receiving cash representing such income, AIV Holdings may have to pay consent dividends, which would result in phantom (i.e., non-cash) taxable income to Guardian AIV, and the Operating Company may need to sell some of the Operating Company's assets at times and/or at prices that the Operating Company would not consider advantageous.

For federal income tax purposes, AIV Holdings will include in its taxable income its allocable share of certain amounts that the Operating Company has not yet received in cash, such as original issue discount or accruals on a contingent payment debt instrument, which may occur if the Operating Company receives warrants in connection with the origination of a loan or possibly in other circumstances or contracted payment-in-kind, or PIK, interest, which generally represents contractual interest added to the loan balance and due at the end of the loan term. AIV Holdings' allocable share of such original issue discount and PIK interest will be included in AIV Holdings' taxable income before the Operating Company receives any corresponding cash payments. AIV Holdings also may be required to include in its taxable income its allocable share of certain other amounts that the Operating Company will not receive in cash.

Because in certain cases the Operating Company may recognize taxable income before or without receiving cash representing such income, the Operating Company may have difficulty making distributions to the Operating Company's members that will be sufficient to enable New Mountain Finance to meet the annual distribution requirement necessary for New Mountain Finance to qualify as a RIC. Accordingly, the Operating Company may need to sell some of the Operating Company's assets at times and/or at prices that the Operating Company would not consider advantageous, New Mountain Finance or the Operating Company may need to raise additional equity or debt capital or the Operating Company may need to forego new investment opportunities or otherwise take actions that are disadvantageous to the Operating Company's business (or be unable to take actions that are advantageous to the Operating Company's business) to enable the Operating Company to make distributions to its members that will be sufficient to enable New Mountain Finance to meet the annual distribution requirement necessary for New Mountain Finance to qualify as a RIC.

It is expected that, if the Operating Company does not make cash distributions to AIV Holdings in amounts sufficient for AIV Holdings to meet the annual distribution requirement necessary for AIV Holdings to qualify as a RIC, Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement necessary for AIV Holdings to qualify as a RIC. This would result in phantom (i.e., non-cash) taxable income to Guardian AIV.

Changes in laws or regulations governing our operations may adversely affect our business or cause the Operating Company to alter its business strategy.

Changes in the laws or regulations or the interpretations of the laws and regulations that govern business development companies, RICs or non-depository commercial lenders could

significantly affect our operations and our cost of doing business. AIV Holdings, the Operating Company and the Operating Company's portfolio companies are subject to federal, state and local laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, any of which could materially adversely affect our business, including with respect to the types of investments the Operating Company is permitted to make. In addition, any changes to the laws and regulations governing the Operating Company's operations relating to permitted investments may cause it to alter its investment strategy in order to avail ourselves of new or different opportunities. These changes could result in material changes to the strategies and plans set forth in this document and may result in the Operating Company's investment focus shifting from the areas of expertise of the Investment Adviser to other types of investments in which the Investment Adviser may have less expertise or little or no experience. Any such changes, if they occur, could have a material adverse effect on our business, results of operations and financial condition.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, became law. The scope of Dodd-Frank impacts many aspects of the financial services industry, and it requires the development and adoption of many implementing regulations over the next several months and years. The effects of Dodd-Frank on the financial services industry will depend upon the timing and substance of regulations adopted by the various regulatory authorities to implement Dodd-Frank.

The Operating Company and AIV Holdings will incur costs associated with satisfying SEC reporting obligations.

If and until exemptive relief is obtained granting an exemption for the Operating Company and AIV Holdings from the reporting requirements under Section 13(a) of the Exchange Act, both will incur costs associated with their separate periodic reporting requirements under the Exchange Act. There can be no assurances that this exemptive relief will be obtained. Guardian AIV will bear the Operating Company's expenses, as well as AIV Holdings' expenses, indirectly through AIV Holdings' investment in the Operating Company.

Efforts to comply with Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect AIV Holdings.

Upon completion of the initial public offering, AIV Holdings and the Operating Company will be subject to the Sarbanes-Oxley Act, and the related rules and regulations promulgated by the SEC. Under current SEC rules, beginning with AIV Holdings' fiscal year ending December 31, 2012, AIV Holdings' and the Operating Company's management will be required to report on their internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and rules and regulations of the SEC thereunder. AIV Holdings and the Operating Company will be required to review on an annual basis their respective internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our respective internal control over financial reporting. As a result, AIV Holdings and the Operating Company expect to incur significant additional expenses in the near term, which may negatively impact the Operating Company's financial performance and the Operating Company's ability to make distributions to its members and, consequently, AIV Holdings' ability to make distributions to Guardian AIV, its sole stockholder. This process also will result in a diversion of management's time and attention. We cannot be certain as to the timing of completion of any evaluation, testing and remediation actions or the impact of the same on our operations and neither AIV Holdings nor the Operating Company may be able to ensure that the process is effective or that AIV Holdings' or the Operating Company's internal control over financial reporting is or will be effective in a timely manner. In the event that AIV Holdings and the Operating Company are unable to maintain or achieve compliance with

Section 404 of the Sarbanes-Oxley Act and related rules, the Operating Company may be adversely affected.

The Operating Company's business is highly dependent on information systems and systems failures could significantly disrupt its business.

The Operating Company's business is highly dependent on the communications and information systems of the Investment Adviser and its affiliates. Any failure or interruption of such systems could cause delays or other problems in its activities. In addition, because many of the Operating Company's portfolio companies operate and rely on network infrastructure and enterprise applications and internal technology systems for development, marketing, operational, support and other business activities, a disruption or failure of any or all of these systems in the event of a major telecommunications failure, cyber-attack, fire, earthquake, severe weather conditions or other catastrophic event could cause system interruptions, delays in product development and loss of critical data and could otherwise disrupt their business operations.

Risks Relating to Investments

The Operating Company's investments in portfolio companies may be risky, and it could lose all or part of its investment.

Investing in middle-market businesses involves a number of significant risks. Among other things, these companies:

•: may have limited financial resources and may be unable to meet their obligations under their debt instruments that the Operating Company holds, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of the Operating Company realizing any guarantees from subsidiaries or affiliates of its portfolio companies that the Operating Company may have obtained in connection with its investment, as well as a corresponding decrease in the value of any equity components of the Operating Company's investments;
•: may have shorter operating histories, narrower product lines, smaller market shares and/or more significant customer concentrations than larger businesses, which tend to render them more vulnerable to competitors' actions and market conditions, as well as general economic downturns;
•: are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on the Operating Company's portfolio company and, in turn, on us;
•: generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence;
•: may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; and
•: generally have less publicly available information about their businesses, operations and financial condition.

In addition, in the course of providing significant managerial assistance to certain of the Operating Company's portfolio companies, certain of the Operating Company's officers and directors may serve as directors on the boards of such companies. To the extent that litigation arises out of the Operating Company's investments in these companies, the Operating Company's officers and directors may be named as defendants in such litigation, which could result in an

expenditure of funds (through the Operating Company's indemnification of such officers and directors) and the diversion of management time and resources.

The Operating Company's investment strategy, which is focused primarily on privately held companies, presents certain challenges, including the lack of available information about these companies.

The Operating Company invests primarily in privately held companies. There is generally little public information about these companies, and, as a result, the Operating Company must rely on the ability of the Investment Adviser to obtain adequate information to evaluate the potential returns from, and risks related to, investing in these companies. If the Operating Company is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and it may lose money on its investments. Also, privately held companies frequently have less diverse product lines and smaller market presence than larger competitors. They are, thus, generally more vulnerable to economic downturns and may experience substantial variations in operating results. These factors could adversely affect the Operating Company's investment returns.

If the Operating Company makes unsecured investments, those investments might not generate sufficient cash flow to service their debt obligations to the Operating Company.

The Operating Company may make unsecured investments. Unsecured investments may be subordinated to other obligations of the obligor. Unsecured investments often reflect a greater possibility that adverse changes in the financial condition of the obligor or general economic conditions (including, for example, a substantial period of rising interest rates or declining earnings) or both may impair the ability of the obligor to make payment of principal and interest. If the Operating Company makes an unsecured investment in a portfolio company, that portfolio company may be highly leveraged, and its relatively high debt-to-equity ratio may increase the risk that its operations might not generate sufficient cash to service its debt obligations.

If the Operating Company invests in the securities and obligations of distressed and bankrupt issuers, it might not receive interest or other payments.

From time to time, the Operating Company may invest in other types of investments which are not its primary focus, including investments in the securities and obligations of distressed and bankrupt issuers, including debt obligations that are in covenant or payment default. Such investments generally are considered speculative. The repayment of defaulted obligations is subject to significant uncertainties. Defaulted obligations might be repaid only after lengthy workout or bankruptcy proceedings, during which the issuer of those obligations might not make any interest or other payments.

The lack of liquidity in the Operating Company's investments may adversely affect our business.

The Operating Company invests, and will continue to invest, in companies whose securities are not publicly traded and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for the Operating Company to sell these investments when desired. In addition, if the Operating Company is required or otherwise chooses to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which it had previously recorded these investments. The Operating Company's investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. Because most of the Operating Company's investments are illiquid, the Operating Company may be unable to dispose of them in which case AIV Holdings could fail to

qualify as a RIC and/or business development company, or the Operating Company may be unable to do so at a favorable price, and, as a result, the Operating Company and AIV Holdings may suffer losses.

Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of the Operating Company's portfolio investments, reducing the Operating Company's net asset value through increased net unrealized depreciation.

As a business development company, the Operating Company is required to carry its investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by its board of directors. Because AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset immediately following the initial public offering will be its ownership of common membership units of the Operating Company, AIV Holdings' net asset value will be based on the Operating Company's valuation of its investments and its percentage interest in the Operating Company. As part of the valuation process, the Operating Company may take into account the following types of factors, if relevant, in determining the fair value of its investments:

•: a comparison of the portfolio company's securities to publicly traded securities;
•: the enterprise value of a portfolio company;
•: the nature and realizable value of any collateral;
•: the portfolio company's ability to make payments and its earnings and discounted cash flow;
•: the markets in which the portfolio company does business; and
•: changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made in the future and other relevant factors.

When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Operating Company will use the pricing indicated by the external event to corroborate its valuation. The Operating Company will record decreases in the market values or fair values of its investments as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in the Operating Company's portfolio. The effect of all of these factors on the Operating Company's portfolio may reduce the Operating Company's net asset value, and, indirectly, AIV Holdings' net asset value based on its percentage interest in the Operating Company, by increasing net unrealized depreciation in the Operating Company's portfolio. Depending on market conditions, the Operating Company could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on its business, financial condition, results of operations and cash flows.

If the Operating Company is unable to make follow-on investments in its portfolio companies, the value of its investment portfolio could be adversely affected.

Following an initial investment in a portfolio company, the Operating Company may make additional investments in that portfolio company as "follow-on" investments, in order to (i) increase or maintain in whole or in part its equity ownership percentage, (ii) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing or (iii) attempt to preserve or enhance the value of its investment. The Operating Company may elect not to make follow-on investments or may otherwise lack sufficient funds to make these investments. The Operating Company will have the discretion to make follow-on investments, subject to the availability of capital resources. If the Operating Company fails to make follow-on investments, the

continued viability of a portfolio company and the Operating Company's investment may, in some circumstances, be jeopardized and we could miss an opportunity for the Operating Company to increase its participation in a successful operation. Even if the Operating Company has sufficient capital to make a desired follow-on investment, it may elect not to make a follow-on investment because it may not want to increase its concentration of risk, either because it prefers other opportunities or because it is subject to business development company requirements that would prevent such follow-on investments or such follow-on investments would adversely impact New Mountain Finance's ability to maintain its RIC status.

The Operating Company's portfolio companies may incur debt that ranks equally with, or senior to, the Operating Company's investments in such companies.

The Operating Company invests in Target Securities at all levels of the capital structure. The Operating Company's portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which the Operating Company invests. By their terms, these debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which the Operating Company is entitled to receive payments with respect to the debt instruments in which it invests. In addition, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to the Operating Company's investment in that portfolio company would typically be entitled to receive payment in full before it receives any distribution. After repaying the senior creditors, the portfolio company may not have any remaining assets to use for repaying its obligation to the Operating Company. In the case of debt ranking equally with debt instruments in which the Operating Company invests, it would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

The disposition by the Operating Company of its investments may result in contingent liabilities.

Most of the Operating Company's investments will involve private securities. In connection with the disposition of an investment in private securities, the Operating Company may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. The Operating Company may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to certain potential liabilities. These arrangements may result in contingent liabilities that ultimately yield funding obligations that must be satisfied through the Operating Company's return of certain distributions previously made to it.

There may be circumstances where the Operating Company's debt investments could be subordinated to claims of other creditors or the Operating Company could be subject to lender liability claims.

Even though the Operating Company may have structured certain of its investments as senior loans, if one of its portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which the Operating Company actually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize the Operating Company's debt investment and subordinate all or a portion of the Operating Company's claim to that of other creditors. The Operating Company may also be subject to lender liability claims for actions taken by it with respect to a borrower's business or instances where it exercises control over the borrower. It is possible that the Operating Company could become subject to a lender's liability claim, including as a result of actions taken in rendering significant managerial assistance.

Second priority liens on collateral securing loans that the Operating Company makes to its portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and the Operating Company.

Certain loans to portfolio companies will be secured on a second priority basis by the same collateral securing senior secured debt of such companies. The first priority liens on the collateral will secure the portfolio company's obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the company under the agreements governing the loans. The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from any realization of the collateral to repay their obligations in full before the Operating Company. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then the Operating Company, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the company's remaining assets, if any.

The rights the Operating Company may have with respect to the collateral securing the loans it makes to its portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements entered into with the holders of first priority senior debt. Under an intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens: the ability to cause the commencement of enforcement proceedings against the collateral, the ability to control the conduct of such proceedings, the approval of amendments to collateral documents; releases of liens on the collateral and waivers of past defaults under collateral documents. The Operating Company may not have the ability to control or direct these actions, even if its rights are adversely affected.

The Operating Company generally will not control its portfolio companies.

The Operating Company does not, and we do not expect it to, control most of its portfolio companies, even though the Operating Company may have board representation or board observation rights, and the Operating Company's debt agreements may contain certain restrictive covenants that limit the business and operations of its portfolio companies. As a result, the Operating Company is subject to the risk that a portfolio company may make business decisions with which it disagrees and the management of such company, in which the Operating Company invests as representatives of the holders of their common equity, may take risks or otherwise act in ways that do not serve the Operating Company's interests as debt investors. Due to the lack of liquidity of the investments that the Operating Company typically holds in its portfolio companies, it may not be able to dispose of its investments in the event that it disagrees with the actions of a portfolio company as readily as it would otherwise like to or at favorable prices which could decrease the value of the Operating Company's investments.

Economic recessions or downturns could impair the Operating Company's portfolio companies and harm our operating results.

Many of the Operating Company's portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay the Operating Company's debt investments

during these periods. Therefore, the Operating Company's non-performing assets are likely to increase, and the value of its portfolio is likely to decrease during these periods. Adverse economic conditions also may decrease the value of collateral securing some of the Operating Company's debt investments and the value of the Operating Company's equity investments. Economic slowdowns or recessions could lead to financial losses in the Operating Company's portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase the Operating Company's funding costs, limit New Mountain Finance's and the Operating Company's access to the capital markets or result in a decision by lenders not to extend credit to the Operating Company. These events could prevent the Operating Company from increasing investments and harm our operating results.

Defaults by the Operating Company's portfolio companies may harm our operating results.

A portfolio company's failure to satisfy financial or operating covenants imposed by the Operating Company or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company's ability to meet its obligations under the debt or equity securities that the Operating Company holds.

The Operating Company may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company. In addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become too involved in the borrower's business or exercise control over a borrower. It is possible that the Operating Company could become subject to a lender's liability claim, including as a result of actions taken if it renders significant managerial assistance to the borrower. Furthermore, if one of the Operating Company's portfolio companies were to file for bankruptcy protection, even though the Operating Company may have structured its investment as senior secured debt, depending on the facts and circumstances, including the extent to which the Operating Company provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize the Operating Company's debt holding and subordinate all or a portion of the Operating Company's claim to claims of other creditors.

Prepayments of the Operating Company's debt investments by its portfolio companies could adversely impact the Operating Company's results of operations and reduce its return on equity.

The Operating Company is subject to the risk that the investments it makes in its portfolio companies may be repaid prior to maturity. When this occurs, subject to maintenance of New Mountain Finance's RIC status, the Operating Comany will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and the Operating Company could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, the Operating Company's results of operations could be materially adversely affected if one or more of the Operating Company's portfolio companies elect to prepay amounts owed to it. Additionally, prepayments could negatively impact the Operating Company's return on equity.

The Operating Company may not realize gains from its equity investments.

When the Operating Company invests in Target Securities, it may acquire warrants or other equity securities of portfolio companies as well. The Operating Company may also invest in equity securities directly. To the extent the Operating Company holds equity investments, it will attempt to dispose of them and realize gains upon its disposition of them. However, the equity interests the Operating Company receives may not appreciate in value and, in fact, may decline in value. As a result, the Operating Company may not be able to realize gains from its equity interests, and any gains that it does realize on the disposition of any equity interests may not be sufficient to offset any other losses it experiences. The Operating Company also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow the Operating Company to sell the underlying equity interests.

The performance of the Operating Company's portfolio companies may differ from its historical performance as its investment strategy will include primary originations in addition to secondary market purchases.

Historically, the Predecessor Entities' investment strategy consisted primarily of secondary market purchases in debt securities. The Operating Company is currently in the process of adjusting its investment strategy to also include primary originations. While loans the Operating Company originates and loans it purchases in the secondary market face many of the same risks associated with the financing of leveraged companies, the Operating Company may be exposed to different risks depending on specific business considerations for secondary market purchases or origination of loans. As a result, this strategy may result in different returns from these investments than the types of returns we have historically experienced from secondary market purchases of debt securities.

We may be subject to additional risks if the Operating Company invests in foreign securities and/or engage in hedging transactions.

The 1940 Act generally requires that 70% of the Operating Company's investments be in issuers each of whom is organized under the laws of, and has its principal place of business in, any state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands or any other possession of the United States. The Operating Company's investment strategy does not presently contemplate significant investments in securities of non-U.S. companies. However, the Operating Company may desire to make such investments in the future, to the extent that such transactions and investments are permitted under the 1940 Act. We expect that these investments would focus on the same types of investments that the Operating Company makes in U.S. middle-market companies and accordingly would be complementary to the Operating Company's overall strategy and enhance the diversity of its holdings. Investing in foreign companies could expose the Operating Company to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Investments denominated in foreign currencies would be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. The Operating Company may employ hedging techniques to minimize these risks, but we can offer no assurance that it will, in fact, hedge currency risk, or that if it does, such strategies will be effective.

Engaging in hedging transactions would also entail additional risks. Although it is not currently anticipated that the Operating Company would engage in hedging transactions as a principal investment strategy, and the Predecessor Entities do not currently engage in such transactions, if the Operating Company determined to engage in hedging transactions it generally would seek to hedge against fluctuations of the relative values of its portfolio positions from changes in market interest rates or currency exchange rates. Hedging against a decline in the values of its portfolio positions would not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of the positions declined. However, such hedging could establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. These hedging transactions could also limit the opportunity for gain if the values of the underlying portfolio positions increased. Moreover, it might not be possible to hedge against an exchange rate or interest rate fluctuation that was so generally anticipated that the Operating Company would not be able to enter into a hedging transaction at an acceptable price. If the Operating Company chooses to engage in hedging transactions, there can be no assurances that the Operating Company will achieve the intended benefits of such transactions and, depending on the degree of exposure such transactions could create, such transactions may expose the Operating Company and, indirectly, AIV Holdings to risk of loss.

While the Operating Company may enter into these types of transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates could result in poorer overall investment performance than if it had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged could vary. Moreover, for a variety of reasons, the Operating Company might not seek to establish a perfect correlation between the hedging instruments and the portfolio holdings being hedged. Any imperfect correlation could prevent the Operating Company from achieving the intended hedge and expose it and AIV Holdings to risk of loss. In addition, it might not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities would likely fluctuate as a result of factors not related to currency fluctuations.

Risks Relating to Our Corporate Structure

AIV Holdings will be a holding company with no direct operations of its own, and will depend on distributions from the Operating Company to meet its ongoing obligations.

AIV Holdings will be a holding company with no direct operations of its own, and immediately following the completion of the initial public offering, its only business and sole asset will be its direct ownership of common membership units of the Operating Company. As a result, all investment decisions relating to the Operating Company's portfolio will be made by the Investment Adviser under the supervision of the Operating Company's board of directors, which may be different from AIV Holdings' board of directors. Although the Operating Company's limited liability company agreement, or the "LLC Agreement", provides that in accordance with the Investment Company Act and to the extent required thereby, all matters subject to a member vote will be voted on a "pass through" basis, including with respect to the election of the Operating Company's directors, AIV Holdings will not have any control over the Operating Company's day-to-day operations and investment decisions.

AIV Holdings also will not have any independent ability to generate revenue, and its only source of cash flow from operations will be distributions from the Operating Company or contributions from Guardian AIV. AIV Holdings expects to rely on Guardian AIV to cover the expenses of its day-to-day business. AIV Holdings will also indirectly bear New Mountain Finance's expenses because, pursuant to the Administration Agreement, the Operating Company will

reimburse the Administrator for New Mountain Finance's allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to New Mountain Finance under the Administration Agreement.

In addition, because AIV Holdings is a holding company, its ability to pay distributions to Guardian AIV, its sole stockholder, will depend on AIV Holdings' receipt of the prior distribution from the Operating Company. The Operating Company intends to pay distributions to its members that will be sufficient to enable New Mountain Finance to pay quarterly distributions to its stockholders and to enable New Mountain Finance to obtain and maintain its status as a RIC. The distribution of cash flows by the Operating Company to AIV Holdings will be subject to statutory restrictions under the Delaware Limited Liability Company Act, the 1940 Act and contractual restrictions under the Credit Facility, the SLF Credit Facility or any other debt instruments that may limit the Operating Company's or the SLF's ability to make distributions. In addition, any distributions and payments of fees or costs will be based upon the Operating Company's financial performance. Any distributions of cash will be made on a pro rata basis to all of the Operating Company's members, including AIV Holdings and New Mountain Finance in accordance with each holders' respective percentage interest. Under certain circumstances, the distributions that the Operating Company makes to its members may not be sufficient for AIV Holdings to satisfy the annual distribution requirement necessary for AIV Holdings to qualify as a RIC. In that case, it is expected that Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement. This would result in phantom (i.e., non-cash) taxable income to Guardian AIV.

Risks Relating to the Initial Public Offering

The Operating Company may be unable to invest a significant portion of the proceeds of the initial public offering on acceptable terms in the timeframe we anticipate.

New Mountain Finance will use the gross proceeds from the initial public offering and the concurrent private placement to purchase, on a one-for-one basis, common membership units of the Operating Company. The Operating Company will, in turn, use these proceeds, after paying underwriting discounts and commissions and offering expenses, to make new investments in portfolio companies in accordance with its investment objective and strategies described herein. Delays in the Operating Company investing the net proceeds of the initial public offering may cause our performance to be worse than that of other fully invested business development companies or other lenders or investors pursuing comparable investment strategies. We cannot assure you that the Operating Company will be able to identify any investments that meet its investment objective or that any investment that the Operating Company identifies will produce a positive return. The Operating Company may be unable to invest the net proceeds of the initial public offering on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

We anticipate that, depending on market conditions, it may take up to six to twelve months for the Operating Company to invest substantially all of the net proceeds of the initial public offering in investments meeting its investment objective. During this period, the Operating Company will invest the net proceeds of the initial public offering primarily in cash, cash equivalents, U.S. government securities, repurchase agreements and other high-quality investments maturing in one year or less from the time of investment, which may produce returns that are significantly lower than the returns which it expects to achieve when its portfolio is fully invested in securities meeting its investment objective. In addition, the Operating Company may also use the net proceeds to temporarily repay indebtedness (which amounts will be subject to reborrowing). As a result, any distributions that AIV Holdings receives from the Operating Company and pays to Guardian AIV, its sole stockholder, during this period may be substantially lower than the distributions that it may be able to pay when the Operating Company's portfolio is fully invested in securities meeting its investment objective.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "potential", "should", "will", "would" or similar words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. Our forward-looking statements include, but are not limited to, information in this document regarding general domestic and global economic conditions, our structure, the Operating Company's future financing plans, AIV Holdings' and the Operating Company's ability to operate as business development companies and the expected performance of, and the yield on, the Operating Company's portfolio companies. In particular, there are forward-looking statements under "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under "Risk Factors", as well as any cautionary language in this document, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this document could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this document speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•: AIV Holdings' and the Operating Company's future operating results;
•: the impact of a protracted decline in the liquidity of credit markets;
•: the general economy, including interest and inflation rates, and its impact on the industries in which the Operating Company invests;
•: AIV Holdings' and the Operating Company's business prospects and the prospects of the Operating Company's portfolio companies;
•: the impact of the formation transactions;
•: changes in New Mountain Finance's and the Operating Company's expenses that we will incur as a stand-alone public company as compared to expectations;
•: the operating performance of companies comparable to us;
•: the impact of the investments that we expect the Operating Company to make;
•: the ability of the Operating Company's portfolio companies to achieve their objectives;
•: the Operating Company's ability to make investments consistent with its investment objectives, including with respect to the size, nature and terms of its investments;
•: the ability of the Investment Adviser to locate suitable investments for the Operating Company and to monitor and administer its investments;
•: the ability of the Investment Adviser or its affiliates to attract and retain highly talented professionals;

•: the Operating Company's expected financings and investments;
•: AIV Holdings' and the Operating Company's regulatory structure and tax status;
•: AIV Holdings' and the Operating Company's loss of status or ability to operate as business development companies;
•: AIV Holdings' failure to qualify as a RIC, loss of RIC status or ability to operate as a RIC;
•: the adequacy of the Operating Company's cash resources and working capital and its anticipated use of proceeds;
•: the timing of cash flows, if any, from the operations of the Operating Company's portfolio companies;
•: the impact of interest rate volatility on our results, particularly to the extent the Operating Company uses leverage as part of our investment strategy;
•: actual and potential conflicts of interest with the Investment Adviser and other affiliates of New Mountain;
•: the impact of AIV Holdings' ownership of outstanding common membership units of the Operating Company, AIV Holdings' only asset;
•: the timing, form and amount of any dividend distributions to Guardian AIV's stockholders and distributions from the Operating Company;
•: New Mountain Finance's, AIV Holdings' and the Operating Company's contractual arrangements and relationships with third parties;
•: the impact of future changes in laws or regulations and conditions in our operating areas; and
•: other factors, including those discussed in "Risk Factors".

The forward-looking statements and projections contained in this document are excluded from the safe harbor protection provided by Section 27A of the Securities Act.

FORMATION TRANSACTIONS AND RELATED AGREEMENTS

Our History and Current Structure

AIV Holdings was incorporated in Delaware on March 11, 2011. Prior to the initial public offering, it did not engage in any activities, except in preparation for the initial public offering, and it had no operations or assets. Guardian AIV currently owns all of the issued and outstanding common stock of AIV Holdings. The Operating Company was formed as a subsidiary of Guardian AIV by New Mountain in October 2008. Guardian AIV was formed through an allocation of approximately $300 million of the $5.1 billion of commitments supporting Fund III, a private equity fund managed by New Mountain, and in February 2009 New Mountain formed a co-investment vehicle, Guardian Partners, comprising $20.4 million of commitments.

The simplified diagram below depicts our current organizational structure prior to the formation transactions contemplated by the initial public offering:

Holding Company Structure

General

Following the completion of the initial public offering and the transactions described herein, AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company and it will have no material long-term liabilities. AIV Holdings' only source of cash flow from operations will be distributions from the Operating Company. The Operating Company will be AIV Holdings' operating entity and will be an externally managed business development company which, prior to the completion of the initial public offering, will own all of the operations of the Predecessor Entities existing immediately prior to the formation transactions, including all of the assets and liabilities related to such operations.

Formation Transactions

The following transactions have occurred or will occur in advance of the completion of the initial public offering to effect the holding company structure:

•: Guardian AIV will cause its indirect, wholly-owned subsidiary, New Mountain Guardian Debt Funding, L.L.C., to merge with and into the Operating Company, Guardian AIV's direct, wholly-owned subsidiary, with the Operating Company as the surviving company.
•: New Mountain Guardian Partners, L.P. will cause its indirect, wholly-owned subsidiary, New Mountain Guardian Partners Debt Funding, L.L.C., to merge with and into New Mountain Guardian Partners, L.P.'s direct, wholly-owned subsidiary, New Mountain Guardian Partners (Leveraged), L.L.C., with New Mountain Guardian Partners (Leveraged), L.L.C. as the surviving company.
•: New Mountain Guardian Partners, L.P. will cause New Mountain Guardian Partners (Leveraged), L.L.C. to merge with and into the Operating Company, with the Operating Company as the surviving company. New Mountain Guardian Partners, L.P. will receive a membership interest in the Operating Company as consideration for the transfer of assets in the merger.
•: Guardian AIV and New Mountain Guardian Partners, L.P. will enter into the LLC Agreement, pursuant to which their respective membership interests in the Operating Company will be reclassified into common membership units.
•: The Operating Company will cause its then direct, wholly-owned subsidiary, New Mountain Guardian Partners SPV Funding, L.L.C., to merge with and into New Mountain Guardian SPV Funding, L.L.C., the Operating Company's direct, wholly-owned subsidiary, with New Mountain Guardian SPV Funding, L.L.C. as the surviving company. Upon the merger of these two entities, New Mountain Guardian SPV Funding, L.L.C. will be renamed New Mountain Finance SPV Funding, L.L.C.
•: Guardian AIV will contribute to AIV Holdings, a newly formed Delaware corporation, its common membership units of the Operating Company in exchange for common stock of AIV Holdings.
•: AIV Holdings will enter into a joinder agreement with respect to the LLC Agreement pursuant to which AIV Holdings will be admitted as a member of the Operating Company.
•: New Mountain Guardian Partners, L.P. will contribute to New Mountain Finance its common membership units of the Operating Company in exchange for shares of New Mountain Finance's common stock.

•: New Mountain Finance will enter into a joinder agreement with respect to the LLC Agreement, pursuant to which New Mountain Finance will be admitted as a member of the Operating Company and will agree to acquire from the Operating Company a number of common membership units of the Operating Company equal to the number of shares of common stock sold by New Mountain Finance in the initial public offering and the concurrent private placement at a purchase price per unit equal to the per share offering price at which New Mountain Finance's common stock is sold pursuant to the initial public offering.
•: New Mountain Finance, the Operating Company and AIV Holdings will elect to be treated as business development companies under the 1940 Act.
•: New Mountain Finance and the Operating Company will enter into the Administration Agreement and the Operating Company will enter into the Investment Management Agreement effective on the date New Mountain Finance, the Operating Company and AIV Holdings elect to be treated as business development companies under the 1940 Act.

The Operating Company has calculated its net asset value, the "cutoff NAV", as of March 31, 2011, the "cutoff date". The cutoff NAV was determined and approved by the Operating Company's board of directors and was calculated consistent with its policies for determining net asset value. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments — Net Asset Value".

Consequences of the Initial Public Offering and the Formation Transactions

Upon completion of the initial public offering, New Mountain Finance will cancel the initial share of its common stock held by New Mountain for no consideration. After the initial public offering and the concurrent private placement, New Mountain Finance will own approximately 36.4%, and Guardian AIV will indirectly own, through AIV Holdings, approximately 63.6% of the common membership units of the Operating Company, assuming no exercise of the underwriters' option to purchase additional shares. If the underwriters exercise their option to purchase additional shares of New Mountain Finance's common stock, pursuant to the LLC Agreement, immediately thereafter New Mountain Finance will acquire from the Operating Company an equivalent number of additional common membership units in exchange for the gross proceeds New Mountain Finance receives upon exercise of this option.

After completion of the initial public offering, AIV Holdings' only business and sole asset will be its ownership of common membership units of the Operating Company, and it will have no material long-term liabilities. AIV Holdings' only source of cash flow from operations will be distributions from the Operating Company.

The simplified diagram below depicts our summarized organizational structure immediately after the transactions described in this document (assuming no exercise of the underwriters' option to purchase additional shares):

*: Following the offering, stockholders of New Mountain Finance common stock will include partners of New Mountain Guardian Partners, L.P.
**: These common membership units are exchangeable into shares of New Mountain Finance common stock on a one-for-one basis.

Structure-Related Agreements

�� In connection with the formation transactions referred to above and the initial public offering, AIV Holdings and the Operating Company are entering into various agreements governing the relationship among New Mountain Finance, Guardian AIV, New Mountain Guardian Partners, L.P., AIV Holdings and the Operating Company.

These agreements are summarized below, which summaries are qualified in their entirety by reference to the full text of the agreements which are filed as exhibits to the Form 10.

For a description of the agreements governing the relationship between the Operating Company and the Investment Adviser and the Operating Company's relationship with the Administrator, see "Investment Management Agreement" and "Administration Agreement".

The Operating Company Agreement

Prior to the completion of the initial public offering, Guardian AIV and New Mountain Guardian Partners, L.P. will enter into the LLC Agreement. Limited liability company interests in the Operating Company may, to the extent permissible under the 1940 Act, be represented by one or more classes of units.

In connection with the contribution by Guardian AIV of its common membership units to AIV Holdings, AIV Holdings will enter into a joinder agreement with respect to the LLC Agreement, pursuant to which AIV Holdings will be admitted as a member of the Operating Company. In addition, in connection with the contribution by New Mountain Guardian Partners, L.P. of its common membership units to New Mountain Finance, New Mountain Finance will enter into a joinder agreement with respect to the LLC Agreement, pursuant to which New Mountain Finance will be admitted as a member of the Operating Company.

Under the LLC Agreement, the Operating Company may conduct any business that may be lawfully conducted by a limited liability company under the Delaware Limited Liability Company Act, except that the LLC Agreement requires that the Operating Company conduct its operations in such a manner that will (1) permit New Mountain Finance to satisfy the requirements for qualification as a business development company, (2) permit New Mountain Finance to satisfy the requirements for qualification as a RIC for federal income tax purposes and (3) ensure that the Operating Company will not be classified as a "publicly traded partnership" for purposes of Section 7704 of the Code except to the extent determined by the board of directors of the Operating Company.

Board of Directors. The Operating Company will be managed by a board of directors that, subject to the Investment Company Act, will be elected by a plurality of the Operating Company's members. The Operating Company's initial board of directors will be comprised of the same individuals as the board of directors of New Mountain Finance and AIV Holdings. Under the LLC Agreement, the Operating Company will be required to endeavor to nominate the same slate of director nominees for election by its members as New Mountain Finance. However, there can be no assurance that AIV Holdings' board composition, the Operating Company's board composition and New Mountain Finance's board composition will remain the same following the completion of the initial public offering. The Operating Company's board of directors will be divided into three classes, with the term of one class expiring at each annual meeting of the members of the Operating Company. At each annual meeting, one class of directors is elected to a three-year term. This provision could delay for up to two years the replacement of a majority of the board of directors.

Management. Subject to the overall supervision of the Operating Company's board of directors, the Investment Adviser will manage the Operating Company's day-to-day operations and provide the Operating Company with investment management services pursuant to the Investment Management Agreement. The Operating Company will pay a management fee and incentive fee to the Investment Adviser for its services.

Tax Matters. New Mountain Finance will be the Operating Company's tax matters member and, as such, will have the authority to handle any tax audits of the Operating Company. Under the LLC Agreement, New Mountain Finance will generally be prohibited from taking any action in its capacity as tax matters member, which it knows (or would reasonably be expected to know) would (or would reasonably be expected to) have a significant adverse effect on AIV Holdings, Guardian AIV or Guardian AIV's partners. AIV Holdings will also have a consent right over New Mountain

Finance's actions as the Operating Company's tax matters member if such action would have a significant adverse effect on AIV Holdings, Guardian AIV or Guardian AIV's partners.

The Operating Company intends to make an election under Section 754 of the Code and to cause such election to remain in effect for every year of the Operating Company during which the Operating Company is treated as a partnership for federal income tax purposes. The Operating Company's board of directors will have the authority to cause the Operating Company to make all other tax elections, and all decisions and positions taken with respect to the Operating Company's taxable income or tax loss (or items thereof) under the Code or other applicable tax law will be made in such manner as may be reasonably determined by the Operating Company's board of directors. Under the LLC Agreement, the Operating Company's board of directors will generally be prohibited from making tax elections or making any decision or taking any position with respect to allocations of taxable income that the Operating Company's board of directors knows (or would reasonably be expected to know) would (or would reasonably be expected to) adversely affect New Mountain Finance's status as a RIC or have a significant adverse effect on AIV Holdings, Guardian AIV or Guardian AIV's partners and a greater negative impact proportionally on the amount of taxable inclusions incurred by AIV Holdings with respect to income allocated to it by the Operating Company than if such election, decision or position had not been made or taken.

Exchange Right. The LLC Agreement will provide for an exchange right whereby, upon appropriate notice, any member other than New Mountain Finance will have the right to exchange all or any portion of its common membership units for shares of New Mountain Finance's common stock on a one-for-one basis. This right can be conditionally exercised by any such member, or its transferees, meaning that prior to the receipt of shares of New Mountain Finance's common stock upon exchange, a member can withdraw its request to have its common membership units exchanged for shares of New Mountain Finance's common stock. In addition, if New Mountain Finance and the Operating Company receive exemptive relief to permit the Operating Company to pay 50%, on an after tax basis, of the incentive fee in common membership units of the Operating Company, any such common membership units received by the Investment Adviser will also be exchangeable for shares of New Mountain Finance's common stock to the same extent as set forth in the LLC Agreement.

The LLC Agreement will also provide that, in connection with the occurrence of an event that would result in the dissolution of the Operating Company where prior to or concurrent with the occurrence of such event, New Mountain Finance has adopted a plan relating to the liquidation or dissolution of New Mountain Finance, New Mountain Finance will have the right to acquire all (but not less than all) of the outstanding common membership units of any other member in exchange for shares of New Mountain Finance's common stock on a one-for-one basis.

Distributions and Allocations of Profits and Losses. The LLC Agreement will provide that distributions of cash from the Operating Company will be determined by the Operating Company's board of directors and will be made pro rata among the members holding common membership units in accordance with their respective percentage interests in the Operating Company. The Operating Company intends to make distributions to the Operating Company's members that will be sufficient to enable New Mountain Finance to pay quarterly distributions to its stockholders and to obtain and maintain its status as a RIC.

Similarly, the LLC Agreement provides that, for tax purposes, subject to compliance with the provisions of Section 704(b) and 704(c) of the Code and the corresponding Treasury regulations, the Operating Company will allocate items of income, gain, loss, deduction and credit to its members, including AIV Holdings, pro rata in accordance with their respective percentage interests in the Operating Company held by each such member. AIV Holdings' allocable share of the Operating Company's losses cannot be passed through to its stockholders but will be taken into

account in determining AIV Holdings' taxable income that is required to be distributed to Guardian AIV, as sole stockholder by reason of AIV Holdings' status as a RIC.

If the Operating Company liquidates, debts and other obligations must be satisfied before the members may receive any distributions. Any distributions to members then will be made to members in accordance with their respective positive capital account balances.

Capital Contributions. Upon the completion of the initial public offering, New Mountain Finance will contribute to the Operating Company the gross proceeds of the initial public offering and the concurrent private placement as a capital contribution in exchange for 10,344,827 common membership units, or 11,587,603 common membership units if the underwriters exercise their option to purchase additional shares in full. Following this capital contribution and the formation transactions described above, New Mountain Finance will own approximately 36.4%, and Guardian AIV will indirectly own through AIV Holdings approximately 63.6%, of the common membership units of the Operating Company, assuming no exercise of the underwriters' option to purchase additional shares.

Under the LLC Agreement, New Mountain Finance is also required to contribute the gross proceeds of any subsequent offering of its common stock by New Mountain Finance as additional capital to the Operating Company in exchange for, on a one-to-one basis, additional common membership units of the Operating Company. See "— One-to-One Ratio" below. If New Mountain Finance contributes additional capital to the Operating Company, it will receive additional common membership units of the Operating Company and its percentage interest in the Operating Company will be increased on a proportionate basis based upon the amount of such additional capital contributions. Conversely, the percentage interests of other members, including AIV Holdings, will be decreased on a proportionate basis in the event of additional capital contributions by New Mountain Finance. In addition, if New Mountain Finance contributes additional capital to the Operating Company, the Operating Company can revalue its property to its fair market value (as determined by its board of directors) and the capital accounts of the members will be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property (that has not been reflected in the capital accounts previously) would be allocated among the members, including AIV Holdings, under the terms of the LLC Agreement if there were a taxable disposition of such property for its fair market value (as determined by its board of directors) on the date of revaluation. Under the LLC Agreement, New Mountain Finance is also required to contribute to the Operating Company any reinvested distributions received by it pursuant to its dividend reinvestment plan. In addition, if New Mountain Finance uses newly issued shares to implement the plan, it will receive, on a one-for-one basis, additional common membership units of the Operating Company in exchange for such reinvested distributions.

AIV Holdings is not required, and it does not intend, to make any additional capital contributions to the Operating Company.

One-to-One Ratio. The LLC Agreement contains various provisions requiring that New Mountain Finance and the Operating Company take certain actions in order to maintain, at all times, a one-to-one ratio between the number of common membership units held by New Mountain Finance and the number of shares of New Mountain Finance's common stock outstanding. This one-to-one ratio must also be maintained in the event that New Mountain Finance issues additional shares of its common stock. Accordingly, every time New Mountain Finance issues shares of its common stock, other than in connection with the exercise of the exchange right described above by AIV Holdings, the Investment Adviser, if applicable with respect to any common membership units received as payment of the incentive fee, or any other entity or individual that may become a member (other than New Mountain Finance), the Operating Company will be required to issue additional common membership units to New Mountain Finance. In addition, in order for New

Mountain Finance to pay a dividend or other distribution to holders of its common stock, it must be accompanied by a prior distribution by the Operating Company to all of its members.

If New Mountain Finance redeems, repurchases, acquires, exchanges, cancels or terminates any shares of its common stock, this action must be accompanied by an immediately prior identical (including with respect to the appropriate consideration paid for such action) redemption, repurchase, acquisition, exchange, cancellation or termination of the common membership units of the Operating Company held by New Mountain Finance. If New Mountain Finance splits its common stock, this action must be accompanied by an immediately prior identical split of common membership units of the Operating Company. In addition, in general, upon any consolidation or merger or combination to which New Mountain Finance is a party or any sale or disposition of all or substantially all of its assets to a third party, New Mountain Finance is required to take all necessary action so that the common membership units held by AIV Holdings, the Investment Adviser, if applicable with respect to any common membership units received as payment of the incentive fee, and any other entity or individual that may become a member (other than New Mountain Finance) will be exchangeable on a per-common membership unit basis at any time or from time to time following such event into the kind and amount of shares of stock and/or other securities or property (including cash) receivable upon such event by holders of New Mountain Finance's common stock.

The LLC Agreement also provides that, in connection with any reclassification or recapitalization or any other distribution or dilutive or concentrative event by New Mountain Finance, if AIV Holdings, the Investment Adviser, if applicable with respect to any common membership units received as payment of the incentive fee or any other entity or individual that may become a member (other than New Mountain Finance) exercises the exchange right following such event, such member will generally be treated as if they were entitled to receive the number of shares of New Mountain Finance's common stock or other property (including cash) that it would have been entitled to receive had it exercised its exchange right immediately prior to the record date of such event. In addition, the LLC Agreement provides that New Mountain Finance and the Operating Company must take all necessary action in order to maintain the one-to-one ratio if in the future New Mountain Finance determines to issue options or other types of equity compensation to individuals that provide services to the Operating Company.

Voting. Subject to the Investment Company Act, directors will be elected as set forth above under "— Board of Directors." All other matters submitted to the vote of the members will be decided by a majority vote unless a different vote is required as a matter of law (including the Investment Company Act), in which case such provision will govern and control the voting. The LLC Agreement will also provide that, to the extent required by the Investment Company Act, each of New Mountain Finance and AIV Holdings and any other member that may be an investment company relying on the Investment Company Act will seek instructions from its stockholders with regard to matters subject to a member vote, and each such member will vote on all such matters in accordance with such instructions. Accordingly, to the extent required by the Investment Company Act, New Mountain Finance and AIV Holdings will not have any separate voting power other than to pass through the votes of the respective stockholders of New Mountain Finance and AIV Holdings in accordance with their respective indirect percentage ownership in the Operating Company.

Expenses. All of the Operating Company's expenses and all of New Mountain Finance's expenses, including any amounts owed pursuant to the Administration Agreement, will be borne by the Operating Company. AIV Holdings will bear its own expenses, either through the distributions it receives from the Operating Company or by contributions from Guardian AIV.

Dissolution. The LLC Agreement will provide that the Operating Company may be dissolved with the approval of the board of directors. In addition to a voluntary dissolution, the Operating Company will be dissolved upon the entry of a decree of judicial dissolution in accordance with

Delaware law or upon the termination of the legal existence of the last remaining member of the Operating Company. Upon a dissolution event, the proceeds of liquidation will be distributed in the following order:

•: first, to pay the expenses of winding up, liquidating and dissolving the Operating Company and all of its creditors, including members who are creditors; and
•: second, to the members pro rata in accordance with their respective positive capital account balances.

Upon a dissolution event, if (i) New Mountain Finance is not the sole member at such time and (ii) prior to or concurrent with such event, New Mountain Finance has adopted a plan relating to the liquidation or dissolution of New Mountain Finance, then New Mountain Finance has the right to acquire from any other Operating Company member, including AIV Holdings, all (but not less than all) of the common membership units held by such other member in exchange for shares of New Mountain Finance common stock on a one-for-one basis.

Information. The LLC Agreement provides that the Operating Company's members will be entitled to certain information regarding the Operating Company. This information includes quarterly and annual information regarding the Operating Company, information required for certain tax matters and any other information required under Delaware law or as reasonably requested by a member.

Confidentiality. Each member will agree to maintain the confidentiality of any information received by the member or its affiliates and representatives in connection with the transactions contemplated by the LLC Agreement which is determined to be confidential for a period of three years following the earlier of the date of the Operating Company's dissolution or the date such member ceases to be a member, with customary exceptions, including to the extent disclosure is required by law or judicial process.

Restrictions on Transfer. The LLC Agreement provides that, subject to certain limited exceptions (including transfers to affiliates), a member may not transfer any of its common membership units of the Operating Company to any person without the consent of the Operating Company's board of directors, which consent may be given or withheld in their sole and absolute discretion. No member shall have the right to substitute a transferee as a member in its place. A transferee of common membership units of the Operating Company may be admitted as a substituted member only with the consent of the Operating Company's board of directors, which consent may be given or withheld in their sole and absolute discretion.

Amendment. Unless otherwise required by law, the LLC Agreement may be amended only by the written consent of the members owning a majority of the Operating Company's common membership units then outstanding; provided, however, that no amendment may be made without the consent of a member if the amendment would adversely affect the rights of the member other than on a pro rata basis with other members of common membership units.

Limitation of Liability; Indemnification. The LLC Agreement provides that none of the Operating Company's members or directors or their respective subsidiaries or affiliates may be liable to the Operating Company or any member for any act or omission by such individual or entity in connection with the conduct of affairs of the Operating Company or otherwise incurred in connection with the Operating Company or the LLC Agreement or the matters contemplated therein, in each case unless such act or omission was the result of gross negligence or willful misconduct or constitutes a breach of, or a failure to comply with the LLC Agreement. The LLC Agreement further provides for indemnification of the Operating Company's directors and officers

from and against liabilities arising out of or relating to any alleged action taken by any director or officer of the Operating Company, subject to the Investment Company Act.

Term. The Operating Company shall continue until terminated as provided in the LLC Agreement or by operation of law.

Fiduciary Duties. Circumstances may arise in the future when the interests of the Operating Company's members conflict with the interests of New Mountain Finance's stockholders or AIV Holdings. Following the completion of the initial public offering, the Operating Company's board of directors and the board of directors of New Mountain Finance will be comprised of the same members. However, the Operating Company's board of directors will owe fiduciary duties to the Operating Company's members that could conflict with the fiduciary duties AIV Holdings' board of directors owes to AIV Holdings' stockholders.

Registration Rights Agreement

In connection with the initial public offering, AIV Holdings will enter into a registration rights agreement, or the Registration Rights Agreement, with New Mountain Finance, Steven B. Klinsky, an entity related to Steven B. Klinsky and the Investment Adviser. Subject to several exceptions, AIV Holdings and the Investment Adviser will have the right to require New Mountain Finance to register for public resale under the Securities Act all registerable securities that are held by any of them and that they request to be registered at any time after the expiration or waiver of the lock-up period following the initial public offering. Registerable securities subject to the Registration Rights Agreement are shares of New Mountain Finance's common stock issued or issuable in exchange for common membership units and any other shares of New Mountain Finance's common stock held by AIV Holdings, the Investment Adviser and any of their transferees. The rights under the registration rights agreement can be conditionally exercised by AIV Holdings or the Investment Adviser, meaning that prior to the registration of the shares AIV Holdings or the Investment Adviser can withdraw their request to have the shares registered. AIV Holdings and the Investment Adviser may each assign their rights to any person that acquires registerable securities subject to the Registration Rights Agreement and who agrees to be bound by the terms of the Registration Rights Agreement. Steven B. Klinsky and a related entity will have the right to "piggyback", or include their own registrable securities in such a registration.

AIV Holdings and the Investment Adviser may require New Mountain Finance to use its reasonable best efforts to register under the Securities Act all or any portion of these registerable securities upon a "demand request". The demand registration rights are subject to certain limitations. New Mountain Finance is not obligated to:

•: cause a registration statement with respect to a demand request to be declared effective within forty-five (45) days after the effective date of a previous demand registration, other than a shelf registration pursuant to Rule 415 under the Securities Act of 1933, or within 180 days after the effective date of the registration statement related to the public offering (unless the lock-up agreement entered into by AIV Holdings has been waived by the underwriters);
•: cause a registration statement with respect to a demand request to be declared effective unless the demand request is for a number of shares with a market value that is equal to at least $10 million; or
•: cause to be declared effective more than five registration statements with respect to demand registration rights.

The Registration Rights Agreement will include limited blackout and suspension periods. In addition, AIV Holdings and the Investment Adviser may also require New Mountain Finance to file a shelf

registration statement on Form N-2 for the resale of their registerable securities if New Mountain Finance is eligible to use Form N-2 at that time.

Holders of registerable securities will also have "piggyback" registration rights, which means that these holders may include their respective shares in any future registrations of New Mountain Finance's equity securities, whether or not that registration relates to a primary offering by New Mountain Finance or a secondary offering by or on behalf of any of New Mountain Finance's stockholders. AIV Holdings, the Investment Adviser and our Chairman (and a related entity) will have priority over New Mountain Finance in any registration that is an underwritten offering.

Conflicts arising under the Registration Rights Agreement will be resolved as set forth therein. Under the Registration Rights Agreement, AIV Holdings and, if applicable, the Investment Adviser, and our Chairman (and a related entity) will have priority over New Mountain Finance or any other New Mountain Finance stockholder when selling any shares of New Mountain Finance common stock pursuant to their exercise of registration rights under that agreement.

AIV Holdings, the Investment Adviser and our Chairman (and a related entity) will be responsible for the expenses of any demand registration (including underwriters' discounts or commissions) and their pro rata share of any piggyback registration. New Mountain Finance has agreed to indemnify AIV Holdings, the Investment Adviser and our Chairman (and a related entity) with respect to liabilities resulting from untrue statements or omissions in any registration statement filed pursuant to the Registration Rights Agreement, other than untrue statements or omissions resulting from information furnished to us by such parties. AIV Holdings, the Investment Adviser and our Chairman (and a related entity) have also agreed to indemnify New Mountain Finance with respect to liabilities resulting from untrue statements or omissions furnished by them to New Mountain Finance relating to them in any registration statement.

BUSINESS DEVELOPMENT COMPANY
AND REGULATED INVESTMENT COMPANY ELECTIONS

AIV Holdings, New Mountain Finance and the Operating Company intend to elect to be treated as business development companies under the 1940 Act prior to the completion of the initial public offering. In addition, each of AIV Holdings and New Mountain Finance intends to elect to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code, commencing with its taxable year ending on December 31, 2011. AIV Holdings', New Mountain Finance's and the Operating Company's election to be treated as business development companies and AIV Holdings' and New Mountain Finance's elections to be treated as RICs will have a significant impact on the Operating Company's future operations. Some of the most important effects on the future operations of AIV Holdings' and the Operating Company's elections to be treated as business development companies and AIV Holdings' and New Mountain Finance's election to be treated as a RIC are outlined below. In connection with the intended elections to be treated as business development companies, AIV Holdings and the Operating Company expect to file a request with the SEC for exemptive relief to allow them to take certain actions that would otherwise be prohibited by the 1940 Act, as applicable to business development companies.

The Operating Company will report its investments at market value or fair value with changes in value reported through its statement of operations.

In accordance with the requirements of Article 6 of Regulation S-X, the Operating Company will report all of its investments, including debt investments, at market value or, for investments that do not have a readily available market value, at their fair value as determined in good faith by the Operating Company's board of directors. Because AIV Holdings will be a holding company with no direct operations of its own, fair value determinations with respect to the Operating Company's investments will be made by the Operating Company's board of directors. Changes in these values will be reported through the Operating Company's statement of operations under the caption entitled "total net unrealized appreciation (depreciation) from investments." In the event that AIV Holdings' board of directors believes that the Operating Company's fair value determinations are inaccurate, AIV Holdings will adjust the Operating Company's valuations when determining the value of its common membership units of the Operating Company in accordance with valuation procedures to be adopted by AIV Holdings' board of directors prior to the completion of the initial public offering. See "Determination of Net Asset Value".

AIV Holdings generally will be required to pay federal income taxes only on the portion of its taxable income that it does not distribute to its sole stockholder, Guardian AIV (actually or constructively).

As RICs, so long as New Mountain Finance and AIV Holdings meet certain annual distribution, source-of-income and asset diversification requirements, they generally will be required to pay federal income taxes only on the portion of their respective taxable income and gains that they do not distribute (actually or constructively) and certain built-in gains, if any. Because immediately following the completion of the initial public offering, AIV Holdings will have no assets other than its ownership of common membership units of the Operating Company and no source of cash flow other than distributions from the Operating Company, AIV Holdings will look to the Operating Company's assets and income, and will rely on distributions made by the Operating Company to AIV Holdings, for purposes of satisfying these requirements. The Operating Company intends to conduct its operations and make distributions to its members in a manner that will enable New Mountain Finance to satisfy these requirements.

The Operating Company's ability to use leverage as a means of financing its portfolio of investments will be limited.

As a business development company, the Operating Company will be required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities of at least 200%. The Operating Company will consolidate the assets and liabilities of SLF for purposes of its financial statements and calculating compliance with the 200% asset coverage ratio. For this purpose, senior securities include all borrowings by the Operating Company and SLF and any preferred membership units the Operating Company may issue in the future. In addition to any limitations imposed by the Operating Company's and SLF's existing or future credit facilities, the Operating Company's and SLF's ability to continue to utilize leverage as a means of financing its portfolio of investments may also be limited by this asset coverage test. Because immediately following the completion of the initial public offering, AIV Holdings will have no assets other than its ownership of common membership units of the Operating Company and will have no material long-term liabilities, AIV Holdings will look to the Operating Company's assets for purposes of satisfying this test.

AIV Holdings intends to distribute substantially all of its income to its stockholders.

As a RIC, AIV Holdings intends to distribute to its sole stockholder, Guardian AIV, substantially all of AIV Holdings' annual taxable income. The Operating Company intends to make distributions to its members that will be sufficient to enable New Mountain Finance to obtain and maintain its status as a RIC. If the Operating Company does not make cash distributions to its members in amounts sufficient for AIV Holdings to meet the annual distribution requirement necessary for AIV Holdings to qualify as a RIC, it is expected that Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement. If this happens, Guardian AIV would be required to include the consent dividend in its taxable income as a dividend from AIV Holdings, which would result in phantom (i.e., non-cash) taxable income to Guardian AIV.

DISTRIBUTIONS

AIV Holdings intends to pay quarterly distributions to Guardian AIV, its sole stockholder, out of assets legally available for distribution, beginning with its first full quarter after the completion of the initial public offering. AIV Holdings' quarterly distributions, if any, will be determined by its board of directors. The actual amount of such distribution, if any, remains subject to approval by AIV Holdings' board of directors, and there can be no assurance that any distribution paid will fall within such range. In addition, because AIV Holdings will be a holding company, it will only be able to pay distributions from distributions received from the Operating Company. The Operating Company intends to make distributions to its members that will be sufficient to enable New Mountain Finance and AIV Holdings to pay quarterly distributions to their stockholders and to enable New Mountain Finance to obtain and maintain its status as a RIC. There can be no assurances that the distributions from the Operating Company will be sufficient for AIV Holdings to pay distributions to Guardian AIV in the future or that any distributions from the Operating Company will be sufficient for AIV Holdings to obtain or maintain its status as a RIC.

AIV Holdings intends to elect to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code, commencing with its taxable year ending on December 31, 2011. To obtain and maintain RIC status, AIV Holdings must, among other things, distribute at least 90% of its net ordinary income and realized net short term capital gains in excess of realized net long-term capital losses, if any. In order to avoid certain excise taxes imposed on RICs, AIV Holdings currently intends to distribute during each calendar year an amount at least equal to the sum of (1) 98% of its net ordinary income for the calendar year, (2) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and net capital gains for preceding years that were not distributed during such years. However, under certain circumstances, the distributions that the Operating Company makes to its members may not be sufficient for AIV Holdings to meet the annual distribution requirement necessary for AIV Holdings to obtain and maintain its status as a RIC or to avoid such excise taxes. In that case, it is expected that Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement and Guardian AIV also may consent to be treated as if it received distributions from AIV Holdings sufficient to avoid such excise taxes. If this happens, Guardian AIV would be required to include the consent dividend in its taxable income as a dividend from AIV Holdings, which would result in phantom (i.e., non-cash) taxable income to Guardian AIV. We can offer no assurance that the Operating Company will achieve results that will permit the payment of any cash distributions to AIV Holdings and, if the Operating Company issues senior securities, the Operating Company will be prohibited from making distributions to its members, including AIV Holdings, if doing so causes the Operating Company to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions to its members are limited by the terms of any of the Operating Company's borrowings. See "Regulation".

AIV Holdings does not intend to reinvest any distributions received from the Operating Company in additional common membership units of the Operating Company.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in this section contains forward-looking statements that involve risks and uncertainties. Please see "Risk Factors" and "Special Note Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with the financial statements and related notes and other financial information appearing elsewhere in this document.

Overview

AIV Holdings will be a holding company with no direct operations of its own, and immediately following the completion of the initial public offering, its only business and sole asset will be its ownership of common membership units of the Operating Company, the operating company for our business. The Operating Company will be an externally managed business development company which, prior to the completion of the initial public offering, will own all of the operations of the Predecessor Entities existing immediately prior to the formation transactions, including all of the assets and liabilities related to such operations. Following the completion of the initial public offering, New Mountain Finance will own approximately 36.4%, and Guardian AIV will indirectly own, through AIV Holdings, approximately 63.6% of the common membership units of the Operating Company, assuming no exercise of the underwriters' option to purchase additional shares.

The Operating Company's investment strategy, developed by the Investment Adviser, is to invest through the Operating Company primarily in the debt of what the Investment Adviser believes are defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) opportunities for niche market dominance. The Investment Adviser, through its relationship with New Mountain, already has access to proprietary research and operating insights into many of the companies and industries that meet this template.

The Operating Company will be externally managed by the Investment Adviser, a wholly-owned subsidiary of New Mountain, a private equity firm with a track record of investing in the middle market and with assets under management (which includes amounts committed, not all of which have been drawn down and invested to date) totaling more than $9.0 billion as of March 31, 2011. New Mountain focuses on investing in defensive growth companies across its private equity, public equity, and credit investment vehicles. The Operating Company was formed as a subsidiary of Guardian AIV by New Mountain in October 2008. Guardian AIV was formed through an allocation of approximately $300 million of the $5.1 billion of commitments supporting Fund III, a private equity fund managed by New Mountain, and in February 2009 New Mountain formed a co-investment vehicle, Guardian Partners, comprising $20.4 million of commitments. As of March 31, 2011, the Operating Company's portfolio had a fair value of approximately $460.0 million in 45 portfolio companies and had a weighted average Yield to Maturity of approximately 12.6%. This calculation excludes the impact of existing leverage, except for the non-recourse debt of SLF. SLF is treated as a fully levered asset of the Operating Company, with SLF's net asset value being included for yield calculation purposes. The Predecessor Entities, excluding SLF, have an unlevered and fully levered yield to maturity as of March 31, 2011 of 12.1% and 14.5%, respectively. SLF has an unlevered and fully levered yield to maturity as of March 31, 2011 of 8.3% and 14.8%, respectively. An unlevered yield to maturity assumes no debt is used to purchase investments and a fully levered yield to maturity assumes each investment is leveraged to full capacity. As of March 31, 2011, our portfolio has a weighted average Unadjusted Yield to Maturity of approximately 10.5%. This calculation has the same assumptions as Yield to Maturity, except that SLF is not treated as a fully levered asset of the Operating Company, and the assets of SLF are consolidated into the Operating Company. Weighted by March 31, 2011 fair value, 79% of our portfolio

companies had an EBITDA of less than $100 million during the last twelve months prior to the time of investment. Since inception, the Predecessor Entities have not experienced any payment defaults or credit losses on these portfolio investments.

The Operating Company intends to find and analyze investment opportunities by utilizing the experience of the Investment Adviser's investment professionals. We expect the Operating Company to primarily target loans to, and invest in, U.S. middle market businesses, a market segment we believe will continue to be underserved by other lenders. We expect the Operating Company to make investments through both primary originations and open-market secondary purchases. The Operating Company's investment objective is to generate current income and capital appreciation through investments in Target Securities. The Operating Company's focus on investment opportunities with contractual current interest payments should allow to provide AIV Holdings with consistent dividend distributions and attractive risk adjusted total returns.

In connection with the initial public offering, a series of formation transactions will be undertaken, such that, following that offering, the Operating Company will own all of the operations of the Predecessor Entities existing immediately prior to the formation transactions, including all of the assets and liabilities related to such operations. As a result of these transactions, Guardian AIV will indirectly own, through its wholly-owned subsidiary AIV Holdings, common membership units of the Operating Company, and New Mountain Guardian Partners, L.P. will own shares of New Mountain Finance's common stock. New Mountain Finance will enter into a joinder agreement with respect to the LLC Agreement with the Operating Company, pursuant to which it will acquire from the Operating Company, with the gross proceeds of the initial public offering and the concurrent private placement, 10,344,827 common membership units of the Operating Company (the number of common membership units will equal the number of shares of New Mountain Finance's common stock sold in the initial public offering) in connection with the completion of the initial public offering. The per unit purchase price New Mountain Finance will pay for the common membership units acquired pursuant to a joinder agreement with respect to the LLC Agreement will be equal to the per share offering price at which its common stock is sold pursuant to the initial public offering and the concurrent private placement. After the completion of the initial public offering, AIV Holdings will be a holding company, and its only business and sole asset will be its ownership of common membership units of the Operating Company, the operating company for its business. The Operating Company will be an externally managed business development company managed by the Investment Adviser. New Mountain Finance, the Operating Company and AIV Holdings intend to elect to be treated as business development companies under the 1940 Act prior to the completion of the initial public offering. AIV Holdings intends to elect to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code, commencing with its taxable year ending on December 31, 2011. As a RIC, AIV Holdings generally will not have to pay corporate-level federal income taxes on any net ordinary income or capital gains that it timely distributes to its stockholders as dividends if it meets certain source-of-income, distribution and asset diversification requirements. The Operating Company intends to make distributions to its members that will be sufficient to enable AIV Holdings to pay quarterly distributions to its sole stockholder. Under certain circumstances, the distributions that the Operating Company makes to its members may not be sufficient for AIV Holdings to satisfy the distribution requirement necessary for AIV Holdings to obtain and maintain its status as a RIC. In that case, it is expected that Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement.

Basis of Presentation

The information discussed below relates to the combined historical operations of New Mountain Finance Holdings, L.L.C., formerly known as New Mountain Guardian (Leveraged), L.L.C., and New Mountain Guardian Partners, L.P., the assets of which will be contributed to the Operating

Company in connection with the formation transactions. The combined financial statements of these entities are the Operating Company's historical financial statements. The Operating Company will be AIV Holdings sole investment following the completion of the initial public offering. To date, AIV Holdings has had no operations. As described in "Formation Transactions and Related Agreements — Holding Company Structure", following the completion of the initial public offering, AIV Holdings will be a holding company with no direct operations, and its only business and sole asset will be its ownership of common membership units of the Operating Company.

We do not believe that the combined historical operating performance is necessarily indicative of the results of operations that AIV Holdings or the Operating Company expect to report in future periods. Prior to the completion of the initial public offering, the formation transactions will be consummated and New Mountain Finance, AIV Holdings and the Operating Company will elect to be treated as business development companies. Each of New Mountain Finance and AIV Holdings also intends to elect to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code, commencing with its taxable year ending on December 31, 2011. Because New Mountain Finance, AIV Holdings and the Operating Company intend to be business development companies and New Mountain Finance and AIV Holdings intend to be RICs, the Operating Company will be subject to certain constraints on its operations, including limitations imposed by the 1940 Act and the Code, to which it previously was not subject.

In addition, the historical financial information does not reflect the allocation of certain general and administrative costs or expenses or the impact of management fees that were incurred by affiliates of New Mountain. We expect that, following the completion of the initial public offering, the expenses and management fees of the Operating Company will be higher than those historically incurred by the Operating Company, particularly because the Operating Company will bear the expenses of New Mountain Finance as a stand alone company. Accordingly, our historical combined financial information should not be relied upon as being representative of our financial position or operating results had we operated on a stand-alone basis under similar regulatory constraints, nor are they representative of our financial position or operating results following the initial public offering. In addition, following the completion of the initial public offering AIV Holdings will own approximately 63.6% of the common membership units of the Operating Company. Depending on AIV Holdings ownership interest in the Operating Company, the Operating Company's results of operations may not be consolidated with AIV Holdings results of operations in future periods. As a result, the historical and future financial information may not be representative of AIV Holdings financial information in future periods.

Revenues. The Operating Company generates revenue in the form of interest income on debt investments and capital gains and distributions, if any, on investment securities that we acquire in portfolio companies. Our debt investments typically have a term of three-to-ten years and bear interest at a fixed or floating rate. In some instances, the Operating Company receives payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, the Operating Company receives repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. The Operating Company's portfolio activity also reflects the proceeds of sales of securities. In some cases, the Operating Company's investments provide for deferred interest payments or payment-in-kind, or PIK, interest. The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date. In addition, the Operating Company may generate revenue in the form of commitment, origination, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and the Operating Company accretes or amortizes such amounts as interest income. The Operating Company records prepayment premiums on loans as interest income. Dividend income, if any, is recognized on an accrual basis to the extent that the Operating Company expects to collect such amounts.

Expenses. AIV Holdings will bear its own expenses following the completion of the initial public offering either by contributions from Guardian AIV or with distributions received by the Operating Company. The Operating Company's primary operating expenses will include the payment of management fees, its allocable portion of overhead expenses under the Administration Agreement for services provided to New Mountain Finance and the Operating Company and other operating costs described below. Additionally, the Operating Company pays interest expense on outstanding debt under the Credit Facility and expects to pay interest on any outstanding debt under the Credit Facility following the initial public offering. The Operating Company bears all other out-of-pocket costs and expenses of its and New Mountain Finance's operations and transactions, including:

•: the cost of calculating net asset value, including the cost of any third-party valuation services;
•: the cost of effecting sales and repurchases of shares of New Mountain Finance's common stock and other securities;
•: fees payable to third parties relating to making investments, including out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;
•: transfer agent and custodial fees;
•: out-of-pocket fees and expenses associated with marketing efforts;
•: federal and state registration fees and any stock exchange listing fees;
•: federal, state, local and foreign taxes;
•: independent directors' fees and expenses;
•: brokerage commissions;
•: fidelity bond, directors' and officers' liability insurance and other insurance premiums;
•: direct costs, such as printing, mailing, long distance telephone and staff;
•: fees and expenses associated with independent audits, tax services, and outside legal counsel;
•: costs associated with New Mountain Finance's and the Operating Company's reporting and compliance obligations under the 1940 Act and other applicable federal and state securities laws; and
•: other expenses incurred by the Operating Company, the Investment Adviser or New Mountain Finance in connection with administering its business, including payments under the Administration Agreement that will be based upon New Mountain Finance's and the Operating Company's allocable portion (subject to the review and approval of the Operating Company's board of directors) of overhead.

However, with respect to the expenses incident to any registration of shares of New Mountain Finance's common stock issued in exchange for common membership units of the Operating Company, AIV Holdings and the Investment Adviser, if applicable, will be responsible for the expenses of any demand registration and their pro rata share of any piggyback registration. See "Formation Transactions and Related Agreements — Structure-Related Agreements — Registration Rights Agreement".

Recent Developments(1)

(1): The numbers in the Recent Developments section are unaudited.

Net Asset Value

On April 21, 2011, the Operating Company's board of directors, of which a majority of the board members are independent directors, approved the fair value of the Operating Company's portfolio investments as of March 31, 2011 in accordance with the Operating Company's valuation policy to be $460.0 million and determined the Operating Company's unaudited net asset value as of March 31, 2011 to be $313.5 million, which is adjusted to include $23.3 million of contributions received from our investors in the Predecessor Entities after March 31, 2011. This will result in the issuance of 20,221,938 common membership units of the Operating Company (which are exchangeable on a one-for-one basis into shares of New Mountain Finance common stock) to AIV Holdings and 1,252,964 shares of New Mountain Finance common stock to Guardian Partners for their respective ownership interests in the Predecessor Entities. The Operating Company's March 31, 2011 adjusted net asset value is based on this board-approved fair value of our portfolio investments as well as other factors, including investment income earned on the portfolio since December 31, 2010. The 29.6% change in net asset value from December 31, 2010 was primarily due to additional purchases of $87.3 million, sales of $25.9 million, net contributions received since December 31, 2010 and the Operating Company's retained investment income. The March 31, 2011 adjusted unaudited net asset value was comprised of an estimated $523.0 million in assets (36.2% from SLF) and an estimated $209.5 million in liabilities (52.8% from SLF). The estimated assets included cash of $27.2 million and contributions received from investors after March 31, 2011. The estimated liabilities included $171.8 million of borrowings under the Predecessor Credit Facility and SLF Credit Facility, and a $27.6 million payable for unsettled securities purchased. See "Determination of Net Asset Value". The adjusted unaudited net asset value per share as of March 31, 2011 is different than our actual net asset value for March 31, 2011, primarily due to the contributions from the investors in our Predecessor Entities received after March 31, 2011.

Distributions/Contributions

For the period from March 31, 2011, to April 15, 2011, Guardian AIV and Guardian Partners received aggregate contributions of $23.3 million from our investors in the Predecessor Entities and made no distributions to the partners of Guardian AIV and Guardian Partners.

AIV Holdings will be a holding company, it will only be able to pay distributions on its common stock from distributions received from the Operating Company. The Operating Company intends to make distributions to its members that will be sufficient to enable New Mountain Finance to pay quarterly distributions to its stockholders and to obtain and maintain its status as a RIC. AIV Holdings intends to distribute to Guardian AIV substantially all of its annual taxable income. It is expected that if the Operating Company does not make cash distributions to AIV Holdings in amounts sufficient for AIV Holdings to meet the annual distribution requirement necessary for AIV Holdings to qualify as a RIC, Guardian AIV would consent to be treated as if it received distributions from AIV Holdings sufficient to satisfy the annual distribution requirement.

Recent Portfolio Activity

Below is certain information related to the three most recent purchases over $10 million by the Operating Company after March 31, 2011.

Purchase Date	Name of Portfolio Company	Industry	Type of Investment			Purchase Amount		Tranche Size

						(in millions)		(in millions)
4/15/2011	Unitek Global Services, Inc.	Business Services	First Lien	11.6	%		19.4		100
4/21/2011	Sotera Defense Solutions, Inc.(1)	Federal Services	First Lien	16.8	%		16.8		145
5/2/2011	Pacific Architects and Engineers Incorporated(1)	Federal Services	First Lien	19.4	%		14.7		50

Notes:

(1): Investment is a purchase by SLF.
(2): Assumes that the investments in our portfolio as of a certain date, the Portfolio Date, are purchased at fair value on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity. Interest income is assumed to be received quarterly for all debt securities. For floating rate debt securities, the interest rate is calculated by adding the spread to the projected three-month LIBOR at each respective quarter, which is determined based on the forward three-month LIBOR curve per Bloomberg as of the Portfolio Date. This calculation excludes the impact of existing leverage for assets held by the Predecessor Entities, but includes the impact of pro rata leverage for investments held directly by SLF.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.

Valuation of Portfolio Investments

The Operating Company conducts the valuation of its assets, pursuant to which its net asset value, and, consequently, AIV Holdings' net asset value is determined, at all times consistent with accounting principles generally accepted in the United States of America, or GAAP, and the 1940 Act. The Operating Company's valuation procedures are set forth in more detail below:

Investments for which market quotations are readily available on an exchange are valued at such market quotations. The Investment Adviser may also obtain indicative prices with respect to certain of the Operating Company's investments from pricing services or brokers or dealers in order to value these investments. When doing so, the Investment Adviser determines whether the quote obtained is sufficient to determine the fair value of the investment. If determined adequate, the Operating Company uses the quote obtained.

Investments for which the Operating Company does not have readily available market quotations are valued at fair value as determined in good faith by its board of directors. We expect the Operating Company will value these investments at fair value as determined in good faith by its board of directors using a documented valuation policy and a consistently applied valuation process. The Operating Company's board of directors has engaged an independent third-party valuation firm to provide it with valuation assistance with respect to our material unquoted assets.

Valuation methods may include comparisons of financial ratios of the portfolio companies that issued such private securities to peer companies that are public, the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Operating Company will consider the pricing indicated by the external event to corroborate the private valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

The Operating Company's board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination.

With respect to investments for which market quotations are not readily available, the Operating Company's board of directors undertakes a multi-step valuation process each quarter, as described below:

•: The quarterly valuation process will begin with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
•: Preliminary valuation conclusions will then be documented and discussed with the Operating Company's senior management;

•: At least once annually, the valuation for each portfolio investment for which the Operating Company does not have a readily available market quotation for four consecutive quarters will be reviewed by an independent valuation firm engaged by the Operating Company's board of directors subject to a materiality threshold;
•: The valuation committee of the Operating Company's board of directors will review these valuations; and
•: The Operating Company's board of directors will discuss the valuations and determine the fair value of each investment in the Operating Company's portfolio in good faith.

In following these approaches, the types of factors that are taken into account in fair value pricing investments include, as relevant, but are not limited to: available market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company's ability to make payments, its earnings and discounted cash flows and the markets in which it does business; comparisons of financial ratios of peer companies that are public; comparable merger and acquisition transactions; and the principal market and enterprise values.

Determination of fair values involves subjective judgments and estimates. Under GAAP, the notes to the Operating Company's financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on its financial statements.

In the event that AIV Holdings' board of directors believes that a different fair value for the Operating Company's investments is appropriate, AIV Holdings' board of directors will endeavor to discuss the differences in the valuations with the Operating Company's board of directors for the purposes of resolving the differences in valuation. The valuation procedures of AIV Holdings will be substantially similar to those utilized by the Operating Company described above.

Revenue Recognition

Our revenue recognition policies are as follows:

Investments and Related Investment Income. The Operating Company accounts for investment transactions on a trade-date basis. The Operating Company's board of directors determines the fair value of its portfolio of investments. Interest is recognized on the accrual basis, adjusted for accretion of discount. For investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, the Operating Company will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the cost basis of investment, using the specific identification method, without regard to unrealized gains or losses previously recognized. The Operating Company reports changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in its statement of operations.

Portfolio Composition, Investment Activity and Yield

The fair value of the Operating Company's investments was approximately $460.0 million in 45 portfolio companies at March 31, 2011, $441.1 million in 43 portfolio companies at December 31, 2010, $320.5 million in 24 portfolio companies at December 31, 2009 and $61.5 million in six portfolio companies at December 31, 2008. For the three months ended March 31, 2011, the Operating Company made approximately $87.3 million of new investments in 11 portfolio companies. For the year ended December 31, 2010, the Operating Company made approximately $332.7 million of new investments in 34 portfolio companies. For the year ended December 31, 2009, the Operating Company made approximately $268.4 million of new investments in 29 portfolio companies. From October 2008 (inception) through December 31, 2008, which we refer to in this document as the "2008 Operating Period", the Operating Company made approximately $63.0 million of new investments in six portfolio companies.

For the three months ended March 31, 2011, the Operating Company had approximately $51.4 million in debt repayments in existing portfolio companies and sales of securities in four portfolio companies aggregating approximately $25.9 million. For the year ended December 31, 2010, the Operating Company had approximately $40.3 million in debt repayments in existing portfolio companies and sales of securities in 16 portfolio companies aggregating approximately $217.9 million. For the year ended December 31, 2009, the Operating Company had approximately $10.1 million of debt repayments and sales of securities in 12 portfolio companies aggregating approximately $115.3 million. For the 2008 Operating Period, the Operating Company had approximately $0.1 million of debt repayments and no sales of securities.

The Operating Company had $5.9 million in realized gains on investments for the three month period ended March 31, 2011, $66.3 million in realized gains on investments for the year ended December 31, 2010, and $37.1 million in realized gains on investments for the year ended December 31, 2009. For the 2008 Operating Period, the Operating Company had no realized gains on investments. In addition, during the three months ended March 31, 2011, the Operating Company had a change in unrealized appreciation on 31 portfolio companies totaling approximately $7.4 million, which was offset by a change in unrealized depreciation on 17 portfolio companies totaling approximately $6.3 million. During the year ended December 31, 2010, the Operating Company had a change in unrealized appreciation on 36 portfolio companies totaling approximately $13.0 million, which was offset by a change in unrealized depreciation on 18 portfolio companies totaling approximately $53.0 million. During the year ended December 31, 2009, the Operating Company had a change in unrealized appreciation on 21 portfolio companies totaling approximately $69.3 million, which was offset by a change in unrealized depreciation on four portfolio companies totaling approximately $1.2 million. During the 2008 Operating Period, the Operating Company had a change in unrealized appreciation on two portfolio companies totaling approximately $0.7 million, which was offset by a change in unrealized depreciation on four portfolio companies totaling approximately $2.1 million. Movement in unrealized appreciation or unrealized depreciation can be the result of realizations.

The following tables show the par value and fair value of the Operating Company's portfolio of investments by asset class as of March 31, 2011, December 31, 2010, December 31, 2009 and December 31, 2008 and the Operating Company's portfolio mix by industry as of March 31, 2011:

Portfolio Mix by Type

	March 31, 2011

	Par Value(1)					Fair Value
Type	(in thousands)		% of Total			(in thousands)		% of Total
First lien		340,274		69.8	%		314,514		68.4	%
Second lien		125,872		25.8	%		124,136		27.0	%
Subordinated		21,496		4.4	%		20,886		4.5	%
Equity and other		—		—			485		0.1	%

Total		487,643		100.0	%		460,021		100.0	%

	December 31, 2010

	Par Value(1)					Fair Value
Type	(in thousands)		% of Total			(in thousands)		% of Total
First Lien	$	339,139		73.0	%	$	321,212		72.9	%
Second Lien		104,346		22.4	%		98,935		22.4	%
Subordinated		21,496		4.6	%		20,378		4.6	%
Equity and other		—		—			533		0.1	%

Total	$	464,981		100.0	%	$	441,058		100.0	%

	December 31, 2009

	Par Value(1)					Fair Value
Type	(in thousands)		% of Total			(in thousands)		% of Total
First lien	$	314,173		76.2	%	$	244,929		76.4	%
Second lien		66,511		16.1	%		53,255		16.6	%
Subordinated		31,728		7.7	%		22,339		7.0	%

Total	$	412,412		100.0	%	$	320,523		100.0	%

	December 31, 2008

	Par Value(1)					Fair Value
Type	(in thousands)		% of Total			(in thousands)		% of Total
First lien	$	113,747		100.0	%	$	61,451		100.0	%

Total	$	113,747		100.0	%	$	61,451		100.0	%

(1): Excludes shares and warrants.

Portfolio Mix by Industry

	As of March 31, 2011

	Par Value(1)					Fair Value
Industry	(in thousands)		% of Total			(in thousands)		% of Total
Software		121,638		24.9	%		117,445		25.6	%
Healthcare Services		92,424		18.9	%		92,181		20.0	%
Business Services		62,823		12.9	%		46,192		10.0	%
Education		34,644		7.1	%		32,035		7.0	%
Federal Services		31,491		6.4	%		31,920		6.9	%
Consumer Services		26,589		5.5	%		25,330		5.5	%
Industrial Services		26,137		5.4	%		25,154		5.5	%
Information Services		16,500		3.4	%		16,418		3.6	%
Healthcare Information Technology		13,965		2.9	%		13,930		3.0	%
Telecommunication		11,970		2.5	%		12,209		2.7	%
Media		12,000		2.5	%		12,060		2.6	%
Power Generation		11,372		2.3	%		9,130		2.0	%
Information Technology		7,000		1.4	%		6,553		1.4	%
Logistics		6,000		1.2	%		6,090		1.3	%
Franchises		5,906		1.2	%		5,983		1.3	%
Healthcare Facilities		3,815		0.8	%		3,820		0.8	%
Energy		3,369		0.7	%		3,571		0.8	%

Total		487,643		100.0	%		460,021		100.0	%

(1): Excludes shares and warrants.

As of March 31, 2011, December 31, 2010, December 31, 2009 and December 31, 2008, the weighted average Yield to Maturity of the Operating Company's portfolio was approximately 12.6%, 12.5%, 12.7% and 18.8% respectively. As of March 31, 2011, the components of the 12.6% weighted average Yield to Maturity of the Operating Company's portfolio were: (1) 9.8% cash interest based on LIBOR as of March 31, 2011, (2) an additional 0.6% representing the impact of using the forward three-month LIBOR curve on an asset by asset basis, (3) 1.0% current PIK interest and (4) 1.2% accretion of market discount. This calculation excludes the impact of existing leverage, except for the non-recourse debt of SLF. SLF is treated as a fully levered asset of the Operating Company, with SLF's net asset value being included for yield calculation purposes. As of March 31, 2011, the weighted average Unadjusted Yield to Maturity of our portfolio was 10.5%. This calculation has the same assumptions as Yield to Maturity except that SLF is not treated as a fully levered asset of the Operating Company, and the assets of SLF are consolidated into the Operating Company.

The following table sets forth the Operating Company's realized and unrealized investments since inception as of March 31, 2011.

REALIZED INVESTMENTS

Company		Security	Par Value		$s Invested(1)		$s Received(1)(2)			Holding Period

			(in thousands)		(in thousands)		(in thousands)
RGIS Services, LLC		First lien	$	45,025	$	26,338	$	42,608	1.62x	19 mos.
Brand Energy & Infrastructure Services, Inc.		First lien		38,044		22,586		35,638	1.58x	10 mos.
		Second lien		6,000		2,790		5,355	1.92x	10 mos.
Kronos Incorporated		First lien		30,504		20,426		28,673	1.40x	10 mos.
		Second lien		10,700		7,490		10,594	1.41x	12 mos.
Education Management LLC		First lien		31,328		19,968		28,545	1.43x	4 mos.
Brickman Group Holdings, Inc.		First lien		29,230		18,689		26,830	1.44x	5 mos.
Catalent Pharma Solutions, Inc.		First lien		31,189		6,012		13,519	2.25x	9 mos.
		Subordinated		25,218		4,241		12,030	2.84x	11 mos.
CDW LLC		First lien		25,999		21,341		24,956	1.17x	11 mos.
First Data Corporation		First lien		23,992		15,744		22,561	1.43x	22 mos.
CRC Health Corporation		First lien		22,873		15,405		21,673	1.41x	15 mos.
TA Indigo Holding Corporation		Subordinated		18,916		8,194		18,916	2.31x	11 mos.
Brock Holdings III, Inc.		First lien		19,535		15,086		18,457	1.22x	14 mos.
Laureate Education, Inc.		First lien		17,521		11,517		16,566	1.44x	22 mos.
Sheridan Holdings, Inc.		First lien		15,836		10,261		15,044	1.47x	13 mos.
Airvana Network Solutions Inc.		First lien		13,583		13,312		13,583	1.02x	2 mos.
Aspen Dental Management, Inc		First lien		13,000		12,740		13,000	1.02x	4 mos.
Focus Brands Inc.		First lien		10,094		9,994		10,094	1.01x	2 mos.
Mega Brands, Inc.(3)		First lien		12,684		5,772		7,651	1.33x	3 mos.
		Common Stock		N/A		961		1,194	1.24x	6 mos.
Nielsen Finance LLC		First lien		9,990		6,321		8,746	1.38x	5 mos.
Adesa, Inc.		First lien		9,000		6,155		7,638	1.24x	2 mos.
Berry Plastics Holding Corporation		First lien		8,000		5,375		7,558	1.41x	13 mos.
Hyland Software, Inc.		First lien		7,520		7,445		7,520	1.01x	1 mos.
National CineMedia, LLC		First lien		9,000		5,030		7,380	1.47x	2 mos.
Vision Solutions, Inc		First lien		6,000		5,880		6,000	1.02x	2 mos.
Trident Exploration Corp.		First lien		5,631		5,462		5,693	1.04x	4 mos.
ATI Acquisition Company		Subordinated		4,500		4,410		4,444	1.01x	1 mos.
GSI Commerce Inc		Subordinated		5,000		2,550		4,274	1.68x	6 mos.
Oriental Trading Company, Inc.		First lien		4,000		2,640		3,360	1.27x	1 mos.
Serena Software, Inc.		First lien		2,390		1,473		2,105	1.43x	2 mos.
Applied Systems, Inc.		Second lien		2,000		1,980		2,020	1.02x	1 mos.
Datatel, Inc.		Second lien		2,000		1,960		2,000	1.02x	4 mos.
Sabre Inc.		First lien		2,000		1,510		1,891	1.25x	8 mos.
SonicWALL, Inc.		First lien		966		971		966	0.99x	6 mos.
Surgical Care Affiliates, LLC		First lien		637		377		586	1.55x	0 mos.
Other				1,398		1,144		1,396	1.22x	—

	Total Realized		$	521,303	$	329,550	$	461,064	1.40x	10 mos.

UNREALIZED INVESTMENTS

Company		Security	Par Value		$s Invested(1)		$s Fair Value			Holding Period

			(in thousands)		(in thousands)		(in thousands)
Managed Health Care Associates, Inc.		First lien	$	22,468	$	16,000	$	21,794	1.36x	21 mos.
		Second lien		15,000		10,500		13,950	1.33x	17 mos.
Attachmate Corporation, NetIQ Corporation		Second lien		22,500		15,600		22,416	1.44x	19 mos.
Learning Care Group (US), Inc.		First lien		17,368		17,021		17,368	1.02x	11 mos.
		Subordinated		2,832		2,385		2,700	1.13x	11 mos.
		Warrants		N/A		194		110	0.57x	11 mos.
Decision Resources, LLC		First lien		17,955		17,686		17,977	1.02x	3 mos.
KeyPoint Government Solutions, Inc.		First lien		17,955		17,596		17,865	1.02x	2 mos.
Smile Brands Group Inc.		First lien		17,456		17,194		17,500	1.02x	3 mos.
TravelCLICK, Inc.		First lien		16,500		16,170		16,418	1.02x	0 mos.
Airvana Network Solutions Inc.		First lien		16,000		15,680		16,015	1.02x	7 mos.
Brock Holdings III, Inc.		Second lien		15,000		14,700		15,525	1.06x	0 mos.
Volume Services America, Inc. (Centerplate)		First lien		14,925		14,477		15,018	1.04x	6 mos.
MLM Holdings, Inc.		First lien		14,925		14,701		14,962	1.02x	4 mos.
LANDesk Software, Inc		First lien		15,000		14,700		14,719	1.00x	4 mos.
SonicWALL, Inc.		First lien		4,034		4,054		4,070	1.00x	8 mos.
		Second lien		10,000		9,700		10,150	1.05x	8 mos.
Virtual Radiologic Corporation		First lien		13,965		13,756		13,930	1.01x	3 mos.
Asurion, LLC		First lien		12,968		12,449		13,155	1.06x	5 mos.
Fibertech Networks, LLC (f/k/a Firefox Merger Sub, LLC)		First lien		11,970		11,790		12,209	1.04x	4 mos.
Mailsouth, Inc		First lien		12,000		11,820		12,060	1.02x	3 mos.
Vision Solutions, Inc		Second lien		12,000		11,880		12,060	1.02x	0 mos.
Merge Healthcare Inc.		First lien		11,000		10,780		11,935	1.11x	11 mos.
Merrill Communications LLC		First lien		11,422		8,382		11,422	1.36x	21 mos.
PODS Holding Funding Corp.		Subordinated		11,664		8,350		10,311	1.23x	13 mos.
CHG Companies Inc.		Second lien		10,000		9,800		10,225	1.04x	5 mos.
Vertafore, Inc.		Second lien		10,000		9,900		10,200	1.03x	5 mos.
Sunquest Information Systems, Inc.		Second lien		9,000		8,820		9,315	1.06x	3 mos.
Mach Gen, LLC		Second lien		11,372		6,963		9,130	1.31x	20 mos.
Hyland Software, Inc.		First lien		7,980		7,980		8,005	1.00x	2 mos.
SSI Investments II Limited		Subordinated		7,000		7,070		7,875	1.11x	10 mos.
Wyle Services Corporation		First lien		7,462		7,490		7,514	1.00x	7 mos.
Research Pharmaceutical Services, Inc.		First lien		7,500		7,388		7,463	1.01x	1 mos.
Stratus Technologies, Inc.		First lien		7,000		6,551		6,484	0.99x	12 mos.
		Ordinary shares		N/A		65		56	0.86x	6 mos.
		Preferred shares		N/A		15		13	0.87x	6 mos.
Alion Science and Technology Corporation		First lien		6,073		5,557		6,235	1.12x	12 mos.
		Warrants		N/A		293		306	1.04x	9 mos.
Ozburn-Hessey Holding Company LLC		Second lien		6,000		5,865		6,090	1.04x	12 mos.
Bartlett Holdings, Inc.		First lien		5,985		5,925		6,022	1.02x	4 mos.
Focus Brands Inc.		First lien		5,906		5,906		5,983	1.01x	4 mos.
Datatel, Inc.		Second lien		5,000		4,975		5,075	1.02x	15 mos.
ATI Acquisition Company		First lien		4,444		4,266		4,177	0.98x	15 mos.
Physiotherapy Associates, Inc. / Benchmark Medical, Inc.		First lien		3,815		2,823		3,820	1.35x	17 mos.
LVI Services, Inc.		First lien		5,152		3,628		3,607	0.99x	15 mos.
Trident Exploration Corp.		First lien		3,369		3,288		3,571	1.09x	9 mos.
Brickman Group Holdings, Inc.		First lien		2,993		3,029		3,055	1.01x	5 mos.
Source Media Inc. and Accuity Inc.		First lien		1,986		1,966		2,006	1.02x	2 mos.

	Subtotal		$	464,944	$	427,128	$	461,866	1.08x	7 mos.

Company		Security	Par Value		$s Invested(1)			$s Fair Value				Holding Period

			(in thousands)		(in thousands)			(in thousands)
Cumulative Undrawn Revolvers
RGIS Services, LLC		First lien	$	5,000	$	(2,318	)	$	(269	)
Kronos Incorporated		First lien		4,199		(630	)		(226	)
Education Management LLC		First lien		3,000		(537	)		(195	)
Advantage Sales & Marketing Inc.		First lien		10,500		(1,260	)		(1,155	)

	Subtotal		$	22,699	$	(4,745	)	$	(1,845	)

	Total Unrealized		$	487,643	$	422,383		$	460,021		1.09x	7 mos.

TOTAL

		Par Value		$s Invested		$s Received + Fair Value			Holding Period

		(in thousands)		(in thousands)		(in thousands)
	Realized and Unrealized Investments(4)	$	1,008,946	$	751,933	$	921,085	1.22x	8 mos.
	Investment Income(5)		—		—		42,155	—	—

TOTAL		$	1,008,946	$	751,933	$	963,240	1.28x	8 mos.

Notes:

(1): Excludes fees.
(2): Excludes interest received.
(3): Par value of the term loan was fully relieved through receipt of cash and common stock. The $5.8 million invested capital that is classified in "Realized Investments" as first lien relates to the portion of the original investment that was relieved by the cash payment received, and the $1.0 million invested capital that is classified in "Realized Investments" as common stock relates to the portion of the original investment that was relieved by the common stock received. The common stock was sold during the three months ended September 30, 2010.
(4): Historical returns may not be indicative of our future performance.
(5): Excludes amortization of purchase premiums and discounts as well as interest paid-in-kind.

Results of Operations of the Operating Company

Results of Operations for the Three Months Ended March 31, 2011 compared to the Three Months Ended March 31, 2010

Revenue

	Three Months Ended

	March 31, 2011		March 31, 2010		% Change
	(in thousands)
Interest income	$	11,168	$	8,888		26	%
Other income		44		189		(77	)%

Total investment income	$	11,212	$	9,077

Total investment income increased by $2.1 million for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. The increase in investment income was primarily attributable to higher income producing investments and larger invested balances during the three months ended March 31, 2011. Additionally in 2011, interest income increased due to prepayment premiums associated with the refinancing and subsequent early repayment of the debt of multiple portfolio companies.

Operating Expenses

	Three Months Ended

	March 31, 2011		March 31, 2010		% Change
	(in thousands)
Interest and other credit facility expenses	$	1,547	$	666		132	%
Other expenses		182		151		21	%
Professional fees		53		52		2	%

Total operating expenses	$	1,782	$	869

Total operating expenses increased by $0.9 million for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. Interest and other credit facility expenses increased by $0.9 million during the three months ended March 31, 2011. The SLF Credit Facility was originally executed in October 2010 and therefore not outstanding at anytime during the three months ended March 31, 2010. Costs associated with the closing of the SLF Credit Facility are capitalized and charged against income as other credit facility expense.

Following the completion of this offering, the Operating Company will pay management fees under the Investment Management Agreement, which provides a different basis for the calculation of these fees as compared to amounts previously paid prior to the completion of this offering. In addition, historical operating expenses do not reflect the allocation of certain administrative costs and professional fees that will be incurred following the completion of this offering. Accordingly, the Operating Company's historical operating expense amounts will not be comparable to its operating expenses after the completion of this offering.

Realized Gains and Net Change in Unrealized (Depreciation) Appreciation

	Three Months Ended

	March 31, 2011		March 31, 2010
	(in thousands)
Realized gains on investments	$	5,892	$	20,944
Net change in unrealized appreciation (depreciation) of investments		1,097		(2,806	)

Total net realized gains and net change in unrealized appreciation (depreciation)	$	6,989	$	18,138

The net realized and unrealized gains or losses resulted in a net gain of $7.0 million for the three months ended March 31, 2011 compared to a net gain of $18.1 million for the same period in 2010. The net gain for the three months ended March 31, 2011 was primarily driven by the appreciation of our portfolio and the sale or repayment of investments with fair values in excess of December 31, 2010 valuations, resulting in realized gains being greater than the reversal of the cumulative unrealized gains for those investments. The net gain during the three months ended March 31, 2010 was primarily driven by the sharp rise in market prices. We look at total realized and unrealized gains or losses together as movement in unrealized appreciation or depreciation can be the result of realizations.

Results of Operations for the Year Ended December 31, 2010 compared to the Year Ended December 31, 2009

Revenue

	Year Ended

	December 31, 2010		December 31, 2009		% Change
	(in thousands)
Interest income	$	40,485	$	21,109		92%
Other income		890		658		35%

Total investment income	$	41,375	$	21,767

Total investment income increased by $19.6 million for the year ended December 31, 2010 as compared to the year ended December 31, 2009. The increase in investment income was primarily attributable to the larger invested balance during 2010. Additionally, there was an increase during 2010 in the number of investments with higher fixed interest rates relative to 2009. As of December 31, 2010, fixed interest rate investments made up approximately 13.11% of the par value of the portfolio with a weighted average fixed rate of approximately 12.88%. As of December 31, 2009, fixed interest rate investments made up approximately 6.60% of the par value of the portfolio with a weighted average fixed rate of approximately 11.94%.

Operating Expenses

	Year Ended

	December 31, 2010		December 31, 2009		% Change
	(in thousands)
Interest and other credit facility expenses	$	2,948	$	490		502	%
Other expenses		636		487		31	%
Professional fees		327		382		(14	)%

Total operating expenses	$	3,911	$	1,359

Total operating expenses increased by $2.6 million for the year ended December 31, 2010 as compared to the year ended December 31, 2009. Interest and other credit facility expenses increased $2.5 million during the year ended December 31, 2010 as compared to the year ended December 31, 2009. The two credit agreements that comprise the Predecessor Credit Facility were executed in October and November of 2009 and therefore were only outstanding for part of the year in 2009. During 2010, the Predecessor Credit Facility had varying amounts outstanding throughout the whole year. Additionally, the two credit agreements that comprise the SLF Credit Facility were executed in October of 2010. The increase in other expenses of $0.1 million for the year ended December 31, 2010 as compared to the year ended December 31, 2009 was primarily due to an increase in fees paid to third-party vendors.

Following the completion of the initial public offering, the Operating Company will pay management fees under the Investment Management Agreement, which provides a different basis

for the calculation of these fees as compared to amounts previously paid prior to the completion of the initial public offering. In addition, historical operating expenses do not reflect the allocation of certain administrative costs and professional fees that will be incurred following the completion of the initial public offering. Accordingly, the Operating Company's historical operating expense amounts will not be comparable to its operating expenses after the completion of the initial public offering.

Realized Gains and Net Change in Unrealized (Depreciation) Appreciation

	Year Ended

	December 31, 2010			December 31, 2009
	(in thousands)
Realized gains on investments	$	66,287		$	37,129
Net change in unrealized (depreciation) appreciation of investments		(39,959	)		68,143

Total net realized gains and net change in unrealized (depreciation) appreciation	$	26,328		$	105,272

The net realized and unrealized gains or losses resulted in a net gain of $26.3 million for the year ended December 31, 2010 compared to a net gain of $105.3 million for the same period in 2009. The net gain for the year ended December 31, 2010 was primarily driven by the continued appreciation of the Operating Company's portfolio and the sale of investments with fair values in excess of December 31, 2009 valuations, resulting in realized gains being greater than the reversal of the cumulative unrealized gains for those investments. The net gain during the year ended December 31, 2009 was primarily driven by the sharp rise in market prices. We look at total realized and unrealized gains or losses together as movement in unrealized appreciation or depreciation can be the result of realizations.

Results of Operations for the Year Ended December 31, 2009 compared to the October 29 (Inception) to December 31, 2008

Revenue

	Year Ended December 31, 2009		October 29 (Inception) to December 31, 2008

	(in thousands)
Interest income	$	21,109	$	86	NM*
Other income		658		170	287%

Total investment income	$	21,767	$	256

*: Not meaningful.

Investment income increased by $21.5 million for the year ended December 31, 2009 as compared to the two-month period ended December 31, 2008. The increase in investment income was primarily due to a full year of operations, during which the size of the Operating Company's portfolio grew. The value of invested assets for the year ended December 31, 2009 was $320.5 million, an increase of $259.1 million from the end of the 2008 operating period.

Operating Expenses

	Year Ended December 31, 2009		October 29 (Inception) to December 31, 2008

	(in thousands)
Interest and other credit facility expenses	$	490	$	—	N/A
Other expenses		487		—	N/A
Professional fees		382		—	N/A

Total operating expenses	$	1,359	$	—

Total operating expenses were $1.4 million for the year ended December 31, 2009 compared to no operating expenses in the 2008 operating period. Interest and other credit facility expenses incurred during the year ended December 31, 2009 were associated with the Predecessor Credit Facility. Professional fees were $0.4 million during the year ended December 31, 2009, which consisted of legal, audit and other costs related to operations. Following the completion of the initial public offering, the Operating Company will pay management fees under the Investment Management Agreement, which provides a different basis for the calculation of these fees as compared to amounts previously paid prior to the completion of the initial public offering. In addition, historical operating expenses do not reflect the allocation of certain administrative costs and professional fees that will be incurred following the completion of the initial public offering. Accordingly, the Operating Company's historical operating expense amounts will not be comparable to its operating expenses after the completion of the initial public offering.

Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)

	Year Ended December 31, 2009		October 29 (Inception) to December 31, 2008

	(in thousands)
Realized gains on investments	$	37,129	$	—
Net change in unrealized appreciation (depreciation) of investments		68,143		(1,435	)

Total net realized gains and net change in unrealized appreciation (depreciation)	$	105,272	$	(1,435	)

The net realized and unrealized gains or losses resulted in a net gain of $105.3 million for the year ended December 31, 2009 compared to a net loss of $1.4 million for the 2008 operating period. The net gain for the year ended December 31, 2009 was primarily due to the rise in market prices and the sale of portfolio assets. Sales included the full exit of seven portfolio companies and partial exits or repayments of 15 portfolio companies, with total proceeds of $125.4 million. We look at total realized and unrealized gains or losses together as movement in unrealized appreciation or depreciation can be a result of realizations.

Income Tax

As a disregarded entity for federal income tax purposes prior to the initial public offering, the Operating Company did not pay federal income taxes.

Liquidity and Capital Resources

As of March 31, 2011 and December 31, 2010, 2009 and 2008, the Operating Company had cash and cash equivalents of $27.2 million, $10.7 million, $4.1 million, and $0.2 million, respectively.

Cash provided or used by operating activities for the three months ended March 31, 2011 and the years ended December 31, 2010, 2009 and 2008 was $(70.5) million, $29.1 million, $(157.2) million and $(31.3) million, respectively. Cash provided by operations resulted primarily from income items described in "— Results of Operations" above.

As business development companies, New Mountain Finance and the Operating Company will have an ongoing need to raise additional capital for investment purposes. In the future, the Operating Company may need to increase its liquidity and raise additional capital through offerings by the Operating Company of debt securities or offerings by New Mountain Finance of equity securities, which would in turn increase the equity capital available to the Operating Company, sales of investments by the Operating Company as well as borrowings under the Credit Facility, SLF Credit Facility or other debt facilities. In recent periods, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These events significantly diminished overall confidence in the debt and equity markets and caused increased economic uncertainty. Future deterioration in the financial markets or a prolonged period of illiquidity without improvement could materially impair New Mountain Finance's ability to raise equity capital or the Operating Company's ability to raise debt capital on commercially reasonable terms.

Credit Facilities

The Credit Facility

Prior to the completion of the initial public offering, the Operating Company will become party to the Credit Facility pursuant to a secured credit agreement with Wells Fargo Bank, N.A., as lender, and other parties, providing for potential borrowings of up to $160.0 million, which will amend and restate the Predecessor Credit Facility. Under the Credit Facility, the Operating Company will act as the Collateral Administrator. The Credit Facility is secured by all assets owned by the borrower and contains an advance rate, during the revolving period, of up to 45.0% of eligible first lien debt instruments pledged by the relevant borrower and an advance rate of up to 25.0% of eligible second lien debt instruments pledged by the relevant borrower. Borrowings under the Credit Facility are subject to an (i) asset level maximum adjusted net senior leverage ratio (ii) an asset coverage ratio and (iii) certain other value adjustment events. At March 31, 2011, there was $64.9 million outstanding under the Predecessor Credit Facility.

The revolving period under the Credit Facility terminates on October 21, 2013, and the Credit Facility matures on October 21, 2015. Borrowings under the Credit Facility bear interest at an annual rate of LIBOR plus 3.0%, payable in cash, on the outstanding principal amount. In the case where the daily average bid price of the S&P/LSTA U.S. Leveraged Loan 100 Index is less than 75 (and such index was 96.04 as of April 15, 2011) for a period of ten consecutive Business Days, the rate may be incrementally increased by 0.50%, up to a rate of LIBOR plus 4.50% in the absence of an Event of Default. At March 31, 2011, the effective annual interest rate of the Predecessor Credit Facility was 3.3%. The Credit Facility contains default provisions and affirmative and negative covenants that are usual and customary for secured financings by special purpose entities, including (i) compliance with an asset coverage ratio, (ii) a change of control provision with respect to the borrower and certain of its direct and indirect owners and (iii) a prohibition against incurring additional indebtedness under a separate credit facility. The Operating Company is required to be regulated as a business development company under the 1940 Act. In addition, an event of default will result from a "Collateral Administrator Termination Event", which is defined to include, without limitation, the following events: (i) failure of the Collateral Administrator to make payments into the collection account or to perform certain covenants in the transaction documents related to the Credit Facility; (ii) insolvency of the Collateral Administrator; (iii) the occurrence of any change determined to have a material adverse effect on the Collateral Administrator; and (iv) a change of control of the Collateral Administrator. Following an event of default under the Credit Facility, the administrative agent may declare outstanding amounts immediately due and payable in full. Certain covenants may restrict our business activities, including limitations that could hinder our ability to

finance additional loans and investments. See "Risk Factors — Risks Relating to Our Business — If the Operating Company is unable to comply with the covenants or restrictions in the Operating Company's credit facility, our business could be materially adversely affected".

The SLF Credit Facility

As of the date of the initial public offering, New Mountain Finance SPV Funding, L.L.C. will be party to the SLF Credit Facility pursuant to a secured credit agreement with Wells Fargo Bank, N.A., as lender, New Mountain Finance Holdings, L.L.C., as collateral administrator, and other parties, entered into on October 27, 2010, providing for potential borrowings, after giving effect to subsequent amendments, of $150.0 million. The SLF Credit Facility is secured by all assets owned by New Mountain Finance SPV Funding, L.L.C. and contains an advance rate, during the revolving period, of up to 67.0% of eligible debt instruments, subject to an asset level maximum adjusted net senior leverage ratio and an asset level minimum cash interest coverage ratio. At March 31, 2011, there was $106.9 million outstanding under the SLF Credit Facility.

The revolving period under the SLF Credit Facility terminates on October 27, 2013, and the SLF Credit Facility matures on October 27, 2015. Borrowings under SLF Credit Facility bear interest at an annual rate of LIBOR plus a margin of 2.25% per annum, payable in cash, on the outstanding principal amount. At March 31, 2011, the effective annual interest rate of the SLF Credit Facility was 2.5%. The SLF Credit Facility contains default provisions and affirmative and negative covenants usual and customary for secured financings by special purpose entities, including (i) a change of control provision with respect to the borrower and certain of its direct and indirect owners (including if the Investment Adviser owns 10% or more of the Operating Company), (ii) a cross default triggered by a default under the Credit Facility and (iii) a prohibition against incurring additional indebtedness under a separate credit facility. In addition, an event of default will result from a "Collateral Administrator Termination Event", which is defined to include, without limitation, the following events: (i) failure of the collateral administrator to make payments into the collection account or to perform certain covenants in the transaction documents related to the SLF Credit Facility; (ii) insolvency of the collateral administrator; (iii) the occurrence of any change determined to have a material adverse effect with respect to the collateral administrator; and (iv) a change of control of the collateral administrator. Following an event of default under the SLF Credit Facility, the administrative agent may declare outstanding amounts immediately due and payable in full. Certain covenants may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments. See "Risk Factors — Risks Related to Our Business — If the SLF is unable to comply with the covenants or restrictions in the SLF's credit facility, our business could be materially adversely affected". The debt under the SLF Credit Facility is non-recourse to the Operating Company.

Borrowings

Borrowings of $64.9 million, $59.7 million and $77.7 million were outstanding as of March 31, 2011, December 31, 2010 and December 31, 2009, respectively, under the Predecessor Credit Facility. No borrowings were outstanding under the Predecessor Credit Facility as of December 31, 2008 because the Predecessor Credit Facility was not in place as of December 31, 2008. See "— Liquidity and Capital Resources — Credit Facilities" for a description of the Credit Facility and the Predecessor Credit Facility.

Borrowings of $106.9 million and $56.9 million were outstanding as of March 31, 2011 and December 31, 2010, respectively, under the SLF Credit Facility. No borrowings were outstanding under the SLF Credit Facility as of December 31, 2009 or December 31, 2008 because the SLF Credit Facility was not in place as of December 31, 2009 or December 31, 2008. See "— Liquidity and Capital Resources — Credit Facilities" for a description of the SLF Credit Facility.

Inflation

Inflation has not had a significant effect on the Operating Company's results of operations in any of the reporting periods presented in its financial statements. However, the Operating Company's portfolio companies have and may continue to experience the impact of inflation on their operating results.

Off-Balance Sheet Arrangements

The Operating Company may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of March 31, 2011, December 31, 2010, December 31, 2009 and December 31, 2008, the Operating Company had outstanding commitments to fund investments totaling $22.7 million, $12.2 million, $27.2 million and $5.4 million, respectively, under various undrawn revolving credit and other credit facilities.

Contractual Obligations

	Payments Due by Period (in millions)

	Total		Less Than 1 Year		1 - 3 Years		3-5 Years		More Than 5 Years
Predecessor Credit Facility(1)	$	64.9	$	—	$	—	$	64.9	$	—
SLF Credit Facility(2)		106.9		—		—		106.9		—

Total Contractual Obligations	$	171.8	$	—	$	—	$	171.8	$	—

(1): Under the terms of the $120.0 million Predecessor Credit Facility, all outstanding borrowings under that facility ($64.9 million as of March 31, 2011) were required to be repaid on or before October 21, 2014, but the amended and restated $160 million Credit Facility must be repaid on or before October 21, 2015. As of March 31, 2011, there was approximately $55.1 million of possible capacity remaining under the Predecessor Credit Facility.
(2): Under the terms of the $150.0 million SLF Credit Facility, all outstanding borrowings under that facility ($106.9 million as of March 31, 2011) must be repaid on or before October 27, 2015. As of March 31, 2011, there was approximately $43.1 million of possible capacity remaining under the SLF Credit Facility.

The Operating Company has certain contracts under which it has material future commitments. The Operating Company has $22.7 million of undrawn funding commitments as of March 31, 2011 related to its participation as a lender in revolving credit facilities of its portfolio companies. See "Portfolio Companies".

The Operating Company has entered into the Investment Management Agreement with the Investment Adviser in accordance with the 1940 Act. The Investment Management Agreement will become effective upon the closing of the initial public offering. Under the Investment Management Agreement, the Investment Adviser has agreed to provide the Operating Company with investment advisory and management services. The Operating Company has agreed to pay for these services (1) a management fee equal to a percentage of the value of its gross assets and (2) an incentive fee based on its performance. See "Investment Management Agreement — Overview of the Investment Adviser — Management Fee".

New Mountain Finance and the Operating Company have also entered into an Administration Agreement with the Administrator. The Administration Agreement will become effective upon the closing of the initial public offering. Under the Administration Agreement, the Administrator has agreed to arrange office facilities for New Mountain Finance and the Operating Company and provide New Mountain Finance and the Operating Company with office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct their respective day-to-day operations. See "Administration Agreement".

If any of the contractual obligations discussed above are terminated, New Mountain Finance's costs or the Operating Company's costs under any new agreements that are entered into may increase. In addition, New Mountain Finance or the Operating Company would likely incur significant time and expense in locating alternative parties to provide the services the Operating Company expects to receive under the Investment Management Agreement and New Mountain Finance and the Operating Company Administration Agreement. Any new investment management agreement with the Operating Company would also be subject to approval by its members.

Upon the completion of the initial public offering, our existing management agreement will terminate with no continuing payment or other obligations on the part of either party.

Related Parties

New Mountain Finance, AIV Holdings and the Operating Company have entered into a number of business relationships with affiliated or related parties, including the following:

•: The Operating Company has entered into an Investment Management Agreement with the Investment Adviser.
•: The Administrator arranges office space for New Mountain Finance and the Operating Company and provides New Mountain Finance and the Operating Company with office equipment and administrative services necessary to conduct their respective day-to-day operations pursuant to the Administration Agreement. The Operating Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to New Mountain Finance and the Operating Company under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and the compensation of New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer and their respective staffs.
•: New Mountain Finance and the Operating Company have entered into a royalty-free license agreement with New Mountain, pursuant to which New Mountain has agreed to grant New Mountain Finance and the Operating Company a non-exclusive, royalty-free license to use the name "New Mountain".
•: As a result of our formation transactions, AIV Holdings will own immediately following the completion of the initial public offering approximately 63.6% of the outstanding common membership units of the Operating Company, all of which is exchangeable for shares of New Mountain Finance's common stock.

The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with the Operating Company's. The Investment Adviser and its affiliates may determine that an investment is appropriate for the Operating Company and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser's allocation procedures.

In addition, AIV Holdings and the Operating Company have adopted a formal code of ethics that governs the conduct of their respective officers and directors. These officers and directors also remain subject to the duties imposed by both the 1940 Act and the Delaware General Corporation Law and the Delaware Limited Liability Company Act.

Quantitative and Qualitative Disclosure About Market Risk

AIV Holdings and the Operating Company are subject to financial market risks, including changes in interest rates. During the period covered by the Operating Company's historical financial statements, many of the loans in its portfolio had floating interest rates, and we expect that our

loans in the future will also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a quarterly or monthly basis. In addition, the Credit Facility and the SLF Credit Facility have a floating interest rate provision based on LIBOR, and the Operating Company expects that any other credit facilities into which it enters in the future may have floating interest rate provisions.

Assuming that the balance sheet as of the periods covered by this analysis were to remain constant and that neither AIV Holdings nor the Operating Company took any actions to alter their existing interest rate sensitivity, a hypothetical immediate 1% change in interest rates may affect net income by more than 1% over a one-year horizon. Although we believe that this analysis is indicative of the existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in the Operating Company's portfolio and other business developments, including borrowing under the Credit Facility or other borrowing, that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurance that actual results would not differ materially from the statement above.

The Operating Company may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit the Operating Company's ability to participate in the benefits of lower interest rates with respect to the investments in the Operating Company's portfolio with fixed interest rates.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update No. 2010-06 ("ASU 2010-06"),Improving Disclosures about Fair Value Measurements, which, among other things, amends ASC 820-10 to require entities to separately present purchases, sales, issuances, and settlements in their reconciliation of Level III fair value measurements (i.e., to present such items on a gross basis rather than on a net basis), and which clarifies existing disclosure requirements provided by ASC 820-10 regarding the level of disaggregation and the inputs and valuation techniques used to measure fair value for measurements that fall within either Level II or Level III of the fair value hierarchy. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level III fair value measurements (which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years).

BUSINESS

The Company

AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company, the operating company for our business. The Operating Company will be an externally managed business development company, which, prior to the completion of the initial public offering, will own all of the operations of the Predecessor Entities existing immediately prior to the formation transactions, including all of the assets and liabilities related to such operations. Following the completion of the initial public offering, New Mountain Finance will own approximately 36.4%, and Guardian AIV will indirectly own through AIV Holdings approximately 63.6%, of the common membership units of the Operating Company, assuming no exercise of the underwriters' option to purchase additional shares.

The Operating Company investment strategy, developed by the Investment Adviser, is to invest through the Operating Company primarily in the debt of what the Investment Adviser believes are defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) opportunities for niche market dominance. The Investment Adviser, through its relationship with New Mountain, already has access to proprietary research and operating insights into many of the companies and industries that meet this template.

Since the commencement of the Predecessor Entities' operations in October 2008 through March 31, 2011, approximately $751.4 million has been invested in 65 companies and total realized and unrealized gains and investment income of approximately $211.8 million have been earned with an average holding period of seven months. Going forward, we intend to invest primarily in debt securities that are rated below investment grade and have unlevered yields of 10% to 15%.⁽¹⁾ However, there can be no assurance that targeted returns will be achieved on the Operating Company's investments as they are subject to risks, uncertainties and other factors, some of which are beyond the Operating Company's control, which may lead to non payment of interest and principal. See "Risk Factors — Risks Relating to Our Investments".

(1): For this purpose, the equity of the SLF, which has debt that is non-recourse to the Operating Company, is treated as an asset of the Operating Company.

The following charts summarize the Operating Company's portfolio mix by industry and type based on the fair value⁽¹⁾ of the Operating Company's investments as of March 31, 2011.


By Industry		By Type of Investment

(1): The fair value of the Operating Company's portfolio was determined as of March 31, 2011 using market quotations if readily available, indicative prices from pricing services or brokers or dealers if market quotations are not readily available, or independent valuation firms at least once annually if a materiality threshold is met and neither the market quotations nor indicative prices are readily available.

As of March 31, 2011, the Operating Company's portfolio had a fair value of approximately $460.0 million in 45 portfolio companies and had a weighted average Yield to Maturity of approximately 12.6%. For purposes of this document, references to "Yield to Maturity" assume that the investments in the Operating Company's portfolio as of a certain date, the "Portfolio Date", are purchased at fair value on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity. These references also assume that unfunded revolvers remain undrawn. Interest income is assumed to be received quarterly for all debt securities. For floating rate debt securities, the interest rate is calculated by adding the spread to the projected three-month LIBOR at each respective quarter, which is determined based on the forward three-month LIBOR curve per Bloomberg as of the Portfolio Date. This calculation excludes the impact of existing leverage, except for the non-recourse debt of SLF. SLF is treated as a fully levered asset of the Operating Company, with SLF's net asset value being included for yield calculation purposes. As of March 31, 2011, our portfolio had a weighted average Unadjusted Yield to Maturity of 10.5%. For purposes of this document, references to "Unadjusted Yield to Maturity" have the same assumptions as Yield to Maturity, except that SLF is not treated as a fully levered asset of the Operating Company, and the assets of SLF are consolidated into the Operating Company. The actual yield to maturity may be higher or lower due to the future selection of LIBOR contracts by the individual companies in the Operating Company's portfolio or other factors. Since inception, the Predecessor Entities have not experienced any payment defaults or credit losses on the Operating Company's portfolio investments.

The Operating Company intends to find and analyze investment opportunities by utilizing the experience of the Investment Adviser's investment professionals. Business and industry due diligence on a targeted investment opportunity is led by a team of investment professionals at the Investment Adviser that generally consists of three to seven individuals, typically based on their relevant company and/or industry specific knowledge, drawn from New Mountain's deep pool, which as of March 31, 2011 included approximately 84 staff members, including approximately 53 investment professionals (including 14 managing directors and 13 senior advisers) as well as 16 finance and operational professionals. This is generally the same team structure and due diligence process that is used to underwrite an acquisition of an entire company by New Mountain's private equity fund. Key elements of the team's underwriting process include determining the attractiveness of the target's business model and developing a forecast of its likely operating and financial performance. Team members have diverse backgrounds in investment management, investment banking, consulting and operations. We believe the presence within New Mountain of numerous

former CEOs and other senior operating executives, and their active involvement in our underwriting process, combined with New Mountain's experience as a majority stockholder owning and directing a wide range of businesses and overseeing operating companies in the same or related industries, is a key differentiator for us versus typical debt investment vehicles.

We expect the Operating Company to primarily target loans to, and invest in, U.S. middle market businesses, a market segment we believe will continue to be underserved by other lenders. We define middle market businesses as those businesses with annual EBITDA between $20 million and $200 million. We expect the Operating Company to make investments through both primary originations and open-market secondary purchases. The Operating Company's investment objective is to generate current income and capital appreciation through investments in debt securities at all levels of the capital structure, including first and second lien debt, unsecured notes and mezzanine securities, which we refer to as "Target Securities". The Operating Company intends to invest primarily in debt securities that are rated below investment grade and that typically have maturities of between five and ten years. The Operating Company's focus on investment opportunities with contractual current interest payments should provide AIV Holdings with consistent dividend distributions and attractive risk adjusted total returns. The Operating Company's investments may also include equity interests such as preferred stock, common stock, warrants or options received in connection with our debt investments. In some cases, the Operating Company may invest directly in the equity of private companies. The Operating Company's investments are intended to generally range in size between $10 million and $50 million, although this investment size may vary proportionately as the size of the Operating Company's capital base changes. From time to time, we may also invest through the Operating Company in other types of investments, which are not our primary focus, to enhance the overall return of the portfolio. These investments may include, but are not limited to, distressed debt and related opportunities.

Prior to the completion of the initial public offering, the Operating Company will become a party to the Credit Facility pursuant to a secured credit agreement with Wells Fargo Bank, N.A. The Credit Facility, which matures on October 21, 2015, provides for potential borrowings up to $160 million. Unlike many credit facilities for business development companies, the amount available under the Credit Facility is not subject to reduction as a result of mark to market fluctuations in our portfolio investments. Under the terms of the Credit Facility, the Operating Company is permitted to borrow up to 45.0% or 25.0% of the purchase price of pledged first lien debt securities or non-first lien debt securities, respectively, subject to approval by Wells Fargo Bank, N.A. and borrowings currently bear interest at an annual rate of one month LIBOR plus a margin of 3.0%. As of March 31, 2011, $64.9 million was outstanding under the Predecessor Credit Facility. Borrowings have been used under the Predecessor Credit Facility to purchase the senior secured loans and bonds that constitute a portion of our current portfolio.

The Operating Company expects to continue to finance our investments using both debt and equity, including proceeds from equity issued by New Mountain Finance, which will be contributed to the Operating Company.

On October 7, 2010, the Predecessor Entities formed SLF, an entity that invests in first lien debt securities. SLF is a party to the SLF Credit Facility pursuant to a secured revolving credit agreement with a maximum availability of $150 million and with the Operating Company as the Collateral Administrator, Wells Fargo Securities, LLC as the Administrative Agent and Wells Fargo Bank, National Association, as the Collateral Custodian. The debt under the SLF Credit Facility is non-recourse to the Operating Company and has a maturity date of October 27, 2015. Under the terms of this credit facility, SLF is permitted to borrow up to 67.0% of the purchase price of pledged debt securities subject to approval by Wells Fargo Bank, N.A. and borrowings currently bear interest at an annual rate of LIBOR plus a margin of 2.25%. As of March 31, 2011, $106.9 million was outstanding under the SLF Credit Facility. In conjunction with the SLF Credit Facility, the Predecessor Entities made an equity investment in SLF, and the Operating Company may continue to make additional equity investments. SLF is consolidated on the financial statements of the Predecessor Entities.

For a detailed discussion of the Credit Facility and the SLF Credit Facility, see "Management's Discussion and Analysis of Financial Conditions and Results of Operations — Liquidity and Capital Resources."

New Mountain

New Mountain manages private equity, public equity and debt investments with aggregate assets under management (which includes amounts committed, not all of which have been drawn down and invested to date) totaling more than $9.0 billion as of March 31, 2011.

New Mountain's first private equity fund, the $770 million New Mountain Partners, L.P., or "Fund I", began its investment period in January 2000. New Mountain's second private equity fund, the $1.6 billion New Mountain Partners II, L.P., or "Fund II", began its investment period in January 2005. New Mountain's third private equity fund, Fund III, with over $5.1 billion of aggregate commitments, began its investment period in August 2007. New Mountain manages public equity portfolios of approximately $1.7 billion through New Mountain Vantage Advisers, L.L.C., which is designed to apply New Mountain's established strengths toward non-control positions in the U.S. public equity markets generally. New Mountain manages its debt portfolio through the Operating Company, and the Operating Company is currently New Mountain's only vehicle focused primarily on investing in the Target Securities.

New Mountain's mission is to be "best in class" in the new generation of investment managers as measured by returns, control of risk, service to investors and the quality of the businesses in which New Mountain invests. All of New Mountain's efforts emphasize intensive fundamental research and the proactive creation of proprietary investment advantages in carefully selected industry sectors. New Mountain is a generalist firm but has developed particular competitive advantages in what New Mountain believes to be particularly attractive sectors, such as education, healthcare, logistics, business and industrial services, federal IT services, media, software, insurance, consumer products, financial services and technology, infrastructure and energy. New Mountain is focused on systematically establishing expertise in new sectors in which it believes it will have a competitive advantage over time.

In 2004 and 2007, New Mountain was named "North American Mid-Market Firm of the Year" by Private Equity International. New Mountain has also consistently been named a finalist for "Buyout Firm of the Year" by Buyouts Magazine, having been named one of four finalists for 2009 and 2008 and one of five finalists in 2007. To date, New Mountain has never experienced a bankruptcy of any of its portfolio companies in its private equity efforts or efforts with respect to the Predecessor Entities' business.

The Investment Adviser

AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company. The Operating Company will be externally managed and advised by the Investment Adviser, a wholly-owned subsidiary of New Mountain. The Investment Adviser will manage the Operating Company's day-to-day operations and provide it with investment advisory and management services. In particular, the Investment Adviser will be responsible for identifying attractive investment opportunities, conducting research and due diligence on prospective investments, structuring the Operating Company's investments and monitoring and servicing the Operating Company's investments. Neither AIV Holdings nor the Operating Company currently has or will have any employees. As of March 31, 2011, the Investment Adviser was supported by approximately 84 New Mountain staff members, including approximately 53 investment professionals (including 14 managing directors and 13 senior advisers) as well as 16 finance and operational professionals. These individuals will allocate a portion of their time in support of the Investment Adviser based on their particular expertise as it relates to a potential investment opportunity.

The Investment Adviser has an investment committee comprised of five members, including Steven Klinsky, Robert Hamwee, Adam Collins, Douglas Londal and Alok Singh. The investment committee will be responsible for approving all of the Operating Company's investments above $5 million. The investment committee will also monitor investments in the Operating Company's portfolio and approve all asset dispositions above $5 million. Investments and dispositions below $5 million may be approved by the Operating Company's Chief Executive Officer. These approval thresholds may change over time. We expect to benefit from the extensive and varied relevant experience of the investment professionals serving on the Investment Adviser's investment committee, which includes expertise in private equity, primary and secondary leveraged credit, private mezzanine finance and distressed debt.

Competitive Advantages

We believe that we have the following competitive advantages over other capital providers to middle market companies:

Proven and Differentiated Investment Style With Areas of Deep Industry Knowledge

In making its investment decisions, the Investment Adviser intends to apply New Mountain's long-standing, consistent investment approach that has been in place since its founding more than 10 years ago. We expect to focus on companies in less well followed defensive growth niches of the middle market space where we believe few debt funds have built equivalent research and operational size and scale. The Investment Adviser has a particular emphasis on middle market companies where it believes research scale is often most difficult to achieve, debt financing terms may be most attractive and debt market opportunities may be greatest.

We expect to benefit directly from New Mountain's private equity investment strategy that seeks to identify attractive investment sectors from the top down and then works to become a well positioned investor in these sectors. New Mountain focuses on companies and end markets with sustainable strengths in all economic cycles, particularly ones that are defensive in nature, that are non-cyclical and can maintain pricing power in the midst of a recessionary and/or inflationary environment. New Mountain focuses on companies within sectors in which it has significant expertise (examples include federal services, software, education, niche healthcare, business services, energy and logistics) while typically avoiding investments in companies with end markets that are highly cyclical, face secular headwinds, are overly-dependent on consumer demand or are commodity-like in nature.

In making its investment decisions, the Investment Adviser has adopted the approach of New Mountain, which is based on three primary investment principles:

1.: A generalist approach, combined with proactive pursuit of the highest quality opportunities within carefully selected industries, identified via an intensive and structured ongoing research process;
2.: Emphasis on strong downside protection and strict risk controls; and
3.: Continued search for superior risk adjusted returns, combined with timely, intelligent exits and outstanding return performance.

Established Team and Platform

The Investment Adviser's investment professionals are actively involved in the underwriting of debt investments and are responsible for the diligence and monitoring of the credits. We believe these investment professionals provide the Investment Adviser with a competitive advantage in identifying, investing in and monitoring the Operating Company's investments. The Investment Adviser also has access to teams of operating managers at New Mountain's private equity portfolio companies, consultants on retainer, legal and accounting teams, a management advisory board, directors at portfolio companies and others. We believe the quality and depth of the Investment

Adviser's investment professionals distinguishes the Operating Company from other debt investment funds of similar target investment size.

Many of the debt investments that the Operating Company has made to date have been in the same companies with which New Mountain has already conducted months of intensive acquisition due diligence related to potential private equity investments. We believe that private equity underwriting due diligence is usually more robust than typical due diligence for loan underwriting. In its underwriting of debt investments, the Investment Adviser is able to utilize the research and hands-on operating experience that New Mountain's private equity underwriting teams possess regarding the individual companies and industries. Additionally, the Investment Adviser is also able to utilize its relationships with operating management teams and other private equity sponsors. We believe this will differentiate the Operating Company from many of its competitors.

Experienced Management Team

The Investment Adviser's team members have extensive experience in the leveraged lending space. For example, Steven Klinsky, New Mountain's Founder and Chief Executive Officer, was a general partner of a manager of debt and equity funds, totaling multiple billions of dollars at Forstmann Little & Co. in the 1980s and 1990s. He was also a co-founder of Goldman, Sachs & Co.'s Leverage Buyout Group in the period from 1981 to 1984. Robert Hamwee, Managing Director of New Mountain, was formerly President of GSC Group, Inc., or "GSC", where he was the portfolio manager of GSC's distressed debt funds and led the development of GSC's CLOs. Douglas Londal, Managing Director of New Mountain, was previously co-head of Goldman, Sachs & Co.'s U.S. mezzanine debt team. Alok Singh, Managing Director of New Mountain, has extensive experience structuring debt products as a long-time partner at Bankers Trust Company.

Significant Sourcing Capabilities and Relationships

We believe the Investment Adviser's ability to source attractive investment opportunities is greatly aided by both New Mountain's historical and current reviews of private equity opportunities in the business segments we target. To date, a significant majority of the investments made through the Operating Company are in the debt of companies and industry sectors that were first identified and reviewed in connection with New Mountain's private equity efforts, and the majority of the Operating Company's current pipeline reflects this as well. Furthermore, the Investment Adviser's investment professionals have deep and longstanding relationships in both the private equity sponsor community and the lending/agenting community which they have and will continue to utilize to generate investment opportunities.

Risk Management through Various Cycles

New Mountain has emphasized tight control of risk since its inception and long before the recent global financial distress began. To date, New Mountain has never experienced a bankruptcy of any of its portfolio companies in its private equity efforts or efforts with respect to the Predecessor Entities' business. The Investment Adviser will seek to emphasize tight control of risk with the Operating Company's investments in several important ways, consistent with New Mountain's historical approach. In particular, the Investment Adviser intends to:

•: Emphasize the origination or purchase of debt in what the Investment Adviser believes are defensive growth companies, which are less likely to be dependent on macro-economic cycles;
•: Target investments in companies that are preeminent market leaders in their own industries, and when possible, investments in companies that have strong management teams whose skills are difficult for competitors to acquire or reproduce; and
•: Emphasize capital structure seniority in the Investment Adviser's underwriting process.

Access to Non Mark to Market, Seasoned Leverage Facilities

We believe the Credit Facility and the SLF Credit Facility provide the Operating Company with a substantial amount of capital for deployment into new investment opportunities. In addition, unlike many credit facilities for business development companies, the amount available under the Credit Facility is not subject to reduction as a result of mark to market fluctuations in the Operating Company's portfolio investments. Since October 2009, leverage has been used to increase return on equity, and the Operating Company and SLF intend to continue to use leverage after the completion of the initial public offering, subject to the restrictions on leverage under the 1940 Act. The Credit Facility, pursuant to which the Operating Company is able to borrow up to $160 million, matures on October 21, 2015. The SLF Credit Facility, pursuant to which SLF is able to borrow up to $150 million, matures on October 27, 2015. For a detailed discussion of the Credit Facility and the SLF Credit Facility, see "Management's Discussion and Analysis of Financial Conditions and Results of Operations — Liquidity and Capital Resources — Credit Facilities".

Market Opportunity

We believe that the size of the market for Target Securities, coupled with the demands of middle market companies for flexible sources of capital at competitive terms and rates, create an attractive investment environment for the Operating Company.

•: The leverage finance market has a high level of financing needs over the next several years due to significant bank debt maturities. We believe that the large dollar volume of loans that need to be refinanced will present attractive opportunities to invest capital in a manner consistent with the Operating Company's stated objectives.

Outstanding Loans by Year of Maturity



		Data obtained from industry sources. Note: Data as of December 31, 2010.

•: Middle market companies continue to face difficulties in accessing the capital markets. We believe opportunities to serve the middle market will continue to exist. While many middle market companies were formerly able to raise funds by issuing high-yield bonds, we believe this approach to financing has become more difficult in recent years as institutional investors have sought to invest in larger, more liquid offerings. In addition, many private finance companies and hedge funds have reduced their middle market lending activities due to decreased availability of financing.

•: Consolidation among commercial banks has reduced the focus on middle market lending. We believe that many traditional bank lenders to middle market businesses have either exited or de-emphasized their service and product offerings in the middle market. These traditional lenders have instead focused on lending and providing other services to large corporate clients. We believe this has resulted in fewer key players and the reduced availability of debt capital to the companies the Operating Company targets.

FDIC-Insured Institutions



		Source: FDIC.
		Note: Data as of December 31, 2010.

•: Attractive pricing. Reduced access to, and availability of, debt capital typically increases the interest rates, or pricing, of loans for middle-market lenders. Recent primary debt transactions in this market typically have included meaningful upfront fees, prepayment protections and, in some cases, warrants to purchase common stock, all of which should enhance the profitability of new loans to lenders.


		Average Nominal Spread of Leveraged Loans

		Data obtained from industry sources.


		Average Discounted Spread of Leveraged Loans

		Data obtained from industry sources.

•: Conservative deal structures. As a result of the credit crisis, many lenders are requiring larger equity contributions from financial sponsors. Larger equity contributions create an enhanced margin of safety for lenders because leverage is a lower percentage of the implied enterprise value of the company.

Average Equity Contribution to Leveraged Buyouts (1987 – 4Q10)

Data obtained from industry sources.

Note: Equity includes common equity and preferred stock as well as holding company debt and seller note proceeds downstreamed to the operating company as common equity. Rollover Equity prior to 1996 is not available. There were too few deals in 1991 to form a meaningful sample.

•: Large pool of uninvested private equity capital available for new buyouts. We expect that private equity firms will continue to pursue acquisitions and will seek to leverage their equity investments with mezzanine loans and/or senior loans provided by companies such as the Operating Company.

North America Private Equity Available Capital



		Source: Preqin data as of December 2010.

Investment Criteria

The investment professionals of the Investment Adviser have identified the following investment criteria and guidelines for use in evaluating prospective portfolio companies and they use these criteria and guidelines in evaluating investment opportunities for the Operating Company. However, not all of these criteria and guidelines were, or will be, met in connection with each of the Operating Company's investments.

•: Defensive growth industries. The Operating Company seeks to invest in industries that can succeed in both robust and weak economic environments but which are also sufficiently large and growing to achieve high valuations providing enterprise value cushion for our targeted debt securities.
•: High barriers to competitive entry. The Operating Company targets industries and companies that have well defined end-markets and well established, understandable barriers to competitive entry.
•: Recurring revenue. Where possible, the Operating Company focuses on companies that have a high degree of predictability in future revenue. This recurring revenue can be a function of subscriptions, enrollments, "razor-blade" sales, maintenance arrangements, or other form of contractual relationships.
•: Flexible cost structure. The Operating Company will seek to invest in businesses that have limited fixed costs and therefore modest operating leverage.
•: Strong free cash flow and high return on assets. The Operating Company focuses on businesses with a demonstrated ability to produce meaningful free cash flow from operations. The Operating Company typically targets companies that are not asset intensive and that have minimal capital expenditure and minimal working capital growth needs.
•: Sustainable business and niche market dominance. The Operating Company seeks to invest in businesses that exert niche market dominance in their industry and that have a demonstrated history of sustaining market leadership over time.

•: Established companies. The Operating Company seeks to invest in established companies with sound historical financial performance. The Operating Company does not intend to invest in start-up companies or companies with speculative business plans.
•: Private equity sponsorship. The Operating Company generally seeks to invest in companies in conjunction with private equity sponsors who it knows and trusts and who have proven capabilities in building value. We believe that a private equity sponsor can serve as a committed partner and potentially a meaningful source of future subordinated capital.
•: Seasoned management team. The Operating Company generally will require that its portfolio companies have a seasoned management team with strong corporate governance. Oftentimes the Operating Company will have a historical relationship with or direct knowledge of key managers from previous investment experience.

Investment Selection and Process

The Investment Adviser believes it has developed a proven, consistent and replicable investment process to execute the Operating Company's investment strategy. The Investment Adviser seeks to identify the most attractive investment sectors from the top down and then works to become the most advantaged investor in these sectors. The steps in the Investment Adviser's process include:

Identifying attractive investment sectors top down: The Investment Adviser works continuously and in a variety of ways to proactively identify the most attractive sectors for investment opportunities. The investment professionals of the Investment Adviser participate in this process through both individual and group efforts, formal and informal. The Investment Adviser has also worked with consultants, investment bankers and public equity managers to supplement its internal analyses, although the prime driver of sector ideas has been the Investment Adviser itself.

Creating competitive advantages in the selected industry sectors: Once a sector has been identified, the Investment Adviser works to make itself the most advantaged and knowledgeable investor in that sector. An internal working team is assigned to each project. The team may spend months confirming the sector thesis and building the Investment Adviser's leadership in this sector. In general, the Investment Adviser seeks to construct proprietary databases and to utilize the best specialized industry consultants. The Investment Adviser particularly stresses the establishment of close relationships with operating managers in each field in order to gain the deepest possible level of understanding. When advisable, industry executives have been placed on New Mountain's Management Advisory Board or have been hired on salary as "executives in residence". When the Investment Adviser considers specific investment ideas in its chosen sectors, it can triangulate its own views against the views of its management relationships, consultants, brokers, bankers and others. The Investment Adviser believes this multi-front analysis leads to strong decision making and company identification. The Investment Adviser also believes that its "flexible specialization" approach gives the Operating Company all the benefits of a narrow-based sector fund without forcing the Operating Company to invest in any industry sector at an inappropriate time for that sector. The Investment Adviser can also become a leading investment expert in lesser known or smaller sectors that would not support an entire fund dedicated solely to them.

Targeting companies with leading market share and attractive business models in its chosen sectors: The Investment Adviser, consistent with New Mountain's historical approach, typically follows a "good to great" approach, seeking to invest in debt securities of companies in its chosen sectors that it believes are already safe and successful but where the Investment Adviser sees an opportunity for further increases in enterprise value due to special circumstances existing

at the time of the financing or through value that a sponsor can add. The investment professionals of the Investment Adviser have been successful in targeting companies with leading market shares, rapid growth, high free cash flows, high operating margins, high barriers to entry and which produce goods or services that are of value to their customers.

Utilizing this research platform, the Operating Company has largely invested in the debt of companies and industries that have been researched by New Mountain's private equity efforts. In many instances, the Operating Company has studied the specific debt issuer with which New Mountain has already conducted months of intensive acquisition due diligence related to a potential private equity investment. In other situations, while New Mountain may not have specifically analyzed the issuer in the past, the Operating Company has deep knowledge of the company's industry through New Mountain's private equity work. We expect the Investment Adviser to continue this approach in the future.

Beyond the foregoing, the investment professionals of the Investment Adviser have deep and longstanding relationships in both the private equity sponsor community and the lending/agenting community. The Operating Company has sourced and we expect the Operating Company to continue sourcing new investment opportunities from both private equity sponsors and other lenders and agents. In private equity, the Operating Company has strong, personal relationships with principals at a significant majority of relevant sponsors, and we expect that the Operating Company will continue to utilize those relationships to generate investment opportunities. In the same fashion, the Operating Company has an extensive relationship network with lenders and agents, including commercial banks, investment banks, loan funds, mezzanine funds and a wide range of smaller agents that seek debt capital on behalf of their clients. In addition to newly issued primary opportunities, the Operating Company has extensive experience in sourcing investment opportunities from the secondary market, and will continue to actively monitor that large, and often volatile, area for appropriate investment opportunities.

This team performs the core underwriting function to determine the attractiveness of the target's business model, focusing on the investment criteria described above. The team ultimately develops a forecast of a target's likely operating and financial performance. Team members have diverse backgrounds in investment management, investment banking, consulting, and operations. We believe the presence within New Mountain of numerous former CEOs and other senior operating executives, and their active involvement in the Operating Company's underwriting process, combined with New Mountain's experience as a majority stockholder owning and directing a wide range of businesses and overseeing operating companies in the same or related industries, is a key differentiator for the Operating Company versus typical debt investment vehicles.

In addition to performing rigorous business due diligence, the Investment Adviser also thoroughly reviews and/or structures the relevant credit documentation, including bank credit agreements and bond indentures, to ensure that any securities the Operating Company invests in have appropriate credit rights, protections and remedies. There is a strong focus on appropriate covenant packages. This part of the process, as well as the determination of the appropriate price/yield parameters for individual securities, is led by Robert Hamwee and John Kline with significant input as needed from other professionals with extensive credit experience, such as Steven Klinsky, New Mountain's Founder and Chief Executive Officer, Douglas Londal, a New Mountain Managing Director who was formerly co-head of Goldman, Sachs & Co.'s mezzanine debt group, Alok Singh, a New Mountain Managing Director who has extensive experience structuring debt products as a long-time partner at Bankers Trust Company, and others.

The Investment Committee

The Investment Adviser's investment committee currently consists of Steven Klinsky, Robert Hamwee, Adam Collins, Douglas Londal and Alok Singh. The investment committee is responsible for approving all of the Operating Company's investments above $5 million. The investment committee will also monitor investments in the Operating Company's portfolio and approve all asset dispositions above $5 million. Investments and dispositions below $5 million may be approved by the Operating Company's Chief Executive Officer. These approval thresholds may change over time. We expect to benefit from the extensive and varied relevant experience of the investment professionals serving on the Investment Adviser's investment committee, which includes expertise in private equity, primary and secondary leveraged credit, private mezzanine finance and distressed debt.

The purpose of the investment committee is to evaluate and approve as deemed appropriate all investments by the Investment Adviser, subject to certain thresholds. The committee process is intended to bring the diverse experience and perspectives of the committee's members to the analysis and consideration of every investment. The committee also serves to provide investment consistency and adherence to the Investment Adviser's investment philosophies and policies. The investment committee also determines appropriate investment sizing and suggests ongoing monitoring requirements.

Time permitting, the investment opportunity will also be brought before New Mountain in a process for discussion and analysis directly analogous to New Mountain's investment committee process to approve its private equity acquisitions. Recommendations come with specific size and price limits, and are subject to questions, comments and challenges from all members of New Mountain.

In addition to reviewing investments, the committee meetings serve as a forum to discuss credit views and outlooks. Potential transactions and investment opportunities are also reviewed on a regular basis. Members of the Operating Company's investment team are encouraged to share information and views on credits with the committee early in their analysis. This process improves the quality of the analysis and assists the deal team members to work more efficiently.

Investment Structure

We target debt investments that will yield meaningful current income and occasionally provide the opportunity for capital appreciation through equity securities. Our debt investments are typically structured with the maximum seniority and collateral that the Operating Company can reasonably obtain while seeking to achieve its total return target.

Debt Investments

The terms of our debt investments are tailored to the facts and circumstances of the transaction and prospective portfolio company and structured to protect our rights and manage our risk while creating incentives for the portfolio company to achieve its business plan. A substantial source of return is the cash interest that the Operating Company collects on our debt investments.

•: First Lien Loans and Bonds. First lien loans and bonds generally have terms of four to seven years, provide for a variable or fixed interest rate, may contain prepayment penalties and are secured by a first priority security interest in all existing and future assets of the borrower.
•: Second Lien Loans and Bonds. Second lien loans and bonds generally have terms of five to eight years, provide for a variable or fixed interest rate, typically contain prepayment penalties and are secured by a second priority security interest in all existing and future assets of the borrower. These second lien loans and bonds may include PIK interest, which represents contractual interest accrued and added to the principal that generally becomes due at maturity.

•: Unsecured Senior, Subordinated and "Mezzanine" Loans and Bonds. Any unsecured investments are generally expected to have terms of five to ten years and provide for a fixed interest rate. Unsecured investments may include PIK interest, which represents contractual interest accrued and added to the principal that generally becomes due at maturity, and may have an equity component, such as warrants to purchase common stock in the portfolio company.

In addition, from time to time the Operating Company may also enter into bridge or other commitments to provide future financing to a portfolio company.

The Operating Company's debt investments are often structured to include covenants that seek to minimize our risk of capital loss. The Operating Company's debt investments typically have strong protections, including default penalties, information rights, and a combination of affirmative, negative and financial covenants, such as lien protection and prohibitions against change of control. The Operating Company's debt investments may have substantial prepayment penalties designed to extend the life of the average loan, which we believe will help the Operating Company to grow its portfolio.

The investments in the Operating Company's portfolio as of March 31, 2011, had a weighted average Creation Value Multiple of 4.0x. For purposes of this document, "Creation Value Multiple" is calculated by dividing the "Creation Value" of the portfolio company by the trailing twelve month EBITDA as of December 31, 2010. Creation Value is defined as total debt, assuming par for debt senior to the Operating Company's security, fair value for the Operating Company's security, and no value for debt subordinated to the Operating Company's security, less total cash.

Equity Investments

When the Operating Company makes a debt investment, it may be granted equity in the company in the same class of security as the sponsor receives upon funding. In addition, the Operating Company may from time to time make non-control, equity co-investments in conjunction with private equity sponsors. The Operating Company generally seeks to structure our equity investments, such as direct equity co-investments, to provide it with minority rights provisions and event-driven put rights. The Operating Company also seeks to obtain limited registration rights in connection with these investments, which may include "piggyback" registration rights.

Monitoring

The Operating Company aggressively monitors the performance of each of its portfolio companies, consistently re-underwriting key business drivers and trends. The Operating Company attempts to identify any developments within the company, industry or macroeconomic environment that may alter any material element of our original investment thesis. The Operating Company monitors, on an ongoing basis, the financial trends of each portfolio company. The Operating Company has several methods of evaluating and monitoring the performance of its investments, including but not limited to, the following:

•: review of monthly and quarterly financial statements and financial projections for portfolio companies;
•: ongoing dialogue with and review of original diligence sources;
•: periodic contact with portfolio company management (and, if appropriate the private equity sponsor) to discuss financial position, requirements and accomplishments; and
•: assessment of business development success, including product development, profitability and the portfolio company's overall adherence to its business plan.

In addition to various risk management and monitoring tools, the Operating Company also uses an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the Operating Company's portfolio. The Operating Company uses a four-level numeric rating scale. The following is a description of the conditions associated with each investment rating:

•: Investment Rating 1 — Investment is performing above expectations;
•: Investment Rating 2 — Investment is performing in-line with expectations. All new loans are rated 2 when approved;
•: Investment Rating 3 — Investment is performing below expectations and risk has increased since the original investment; and
•: Investment Rating 4 — Investment is performing substantially below expectations and risks have increased substantially since the original investment.

In the event that the Operating Company determines that an investment is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased, the Operating Company will undertake more aggressive monitoring of the affected portfolio company.

�� The following table shows the distribution of the Operating Company's investments on the 1 to 4 investment rating scale at fair value as of March 31, 2011:

	Par Value(1)					Fair Value

Type	(in thousands)		% of Total			(in thousands)		% of Total
1		102,790		21.1	%		91,853		20.0	%
2		384,853		78.9	%		368,168		80.0	%
3		—		0.0	%		—		0.0	%
4		—		0.0	%		—		0.0	%

Total		487,643		100.0	%		460,021		100.0	%

(1): Excludes shares and warrants.

Exit Strategies/Refinancing

We expect the Operating Company to exit its investments typically through one of four scenarios: (i) the sale of the company resulting in repayment of all outstanding debt, (ii) the recapitalization of the company in which our loan is replaced with debt or equity from a third party or parties, (iii) the repayment of the initial or remaining principal amount of our loan then outstanding at maturity or (iv) the sale of the debt investment. In some investments, there may be scheduled amortization of some portion of our loan which would result in a partial exit of the Operating Company's investment prior to the maturity of the loan.

Managerial Assistance

As a business development company, the Operating Company will offer, and must provide upon request, managerial assistance to the Operating Company's portfolio companies. This assistance could involve monitoring the operations of the Operating Company's portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. The Administrator or its affiliate will provide such managerial assistance on the Operating Company's behalf to portfolio companies that request this assistance. The Operating Company may receive fees for

these services and will reimburse the Administrator or its affiliate for its allocated costs in providing such assistance, subject to the review and approval by the Operating Company's board of directors, including its independent directors.

Competition

The Operating Company competes for investments with a number of business development companies and investment funds (including private equity funds), as well as traditional financial services companies such as commercial banks and other sources of financing. Many of these entities have greater financial and managerial resources than the Operating Company does. We believe the Operating Company is able to be competitive with these entities primarily on the basis of the experience and contacts of its management team, its responsive and efficient investment analysis and decision-making processes, the investment terms it offers, and its willingness to make smaller investments.

We believe that some of the Operating Company's competitors may make investments with interest rates and returns that are comparable to or lower than the rates and returns that the Operating Company targets. Therefore, the Operating Company does not seek to compete solely on the interest rates and returns that it offers to potential portfolio companies. For additional information concerning the competitive risks the Operating Company faces, see "Risk Factors — Risks Relating to Our Business — The Operating Company operates in a highly competitive market for investment opportunities and may not be able to compete effectively".

Employees

Neither AIV Holdings nor the Operating Company has any employees. Day-to-day investment operations that will be conducted by the Operating Company will be managed by the Investment Adviser. See "Investment Management Agreement". The Investment Adviser may need to hire additional investment professionals, based upon its needs, subsequent to completion of the initial public offering. In addition, the Operating Company will reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to New Mountain Finance and the Operating Company under the Administration Agreement, including the compensation of New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer, and their respective staffs. For a more detailed discussion of the Administration Agreement, see "Administration Agreement".

Properties

Our executive office is located at 787 7th Avenue, 48th Floor, New York, NY 10019. We believe that our current office facilities are adequate for our business as we intend to conduct it.

Legal Proceedings

AIV Holdings, the Operating Company, the Investment Adviser and the Administrator are not currently subject to any material legal proceedings, although these entities may, from time to time, be involved in litigation arising out of operations in the normal course of business or otherwise.

PORTFOLIO COMPANIES

The following table sets forth certain information as of March 31, 2011, for each portfolio company in which the Operating Company had a debt or equity investment. All of the Operating Company's current investments, as well as its future investments, will be held by the Operating Company following the completion of the initial public offering. Other than these investments, the Operating Company's only formal relationships with our portfolio companies are the managerial assistance ancillary to its investments that the Operating Company may provide, if requested, and the board observation or participation rights the Operating Company may receive. We do not "control" nor are we an "affiliate" of any of the Operating Company's portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would "control" a portfolio company if we owned more than 25% of its voting securities and would be an "affiliate" of a portfolio company if we owned five percent or more of its voting securities.

Name / Address of Portfolio Company	Industry	Type of Investment	Interest Rate(1)

Advantage Sales & Marketing Inc.(4) 18100 Von Karman Ave., Suite 1000
Irvine, CA 92612	Business Services	First lien	—	12/17/2015	N/A		10.50	%	10,500	(1,260	)	(1,155	)
Airvana Network Solutions Inc. 19 Alpha Road
Chelmsford, MA 01824	Software	First lien	10.00% (L + 800/Q)(7)	3/25/2015	11.0	%	3.81	%	16,000	15,680		16,015
Alion Science and Technology Corporation(5)
1750 Tysons Boulevard,
Suite 1300		First lien	12.00%	11/1/2014	11.6	%	1.95	%	6,073	5,417		6,235
McLean, VA 22102	Federal Services	Warrants	—	—	0.0	%	N/A		—	293		306
ATI Acquisition Company
6351 Boulevard 26, Suite 200
North Richland Hills, TX 76180	Education	First lien	8.25% (Base Rate + 600/Q)(6)(7)	12/30/2014	11.0	%	2.86	%	4,444	4,301		4,177
Attachmate Corporation, NetIQ Corporation
1500 Dexter Ave N.
Seattle, WA 98109	Software	Second lien	7.05% (L + 675/Q)	10/13/2013	8.6	%	8.82	%	22,500	17,463		22,416
Brock Holdings III, Inc.
10343 Sam Houston Park Drive, #200
Houston, TX 77064	Industrial Services	Second lien	10.00% (L + 825/M)(7)	3/16/2018	11.2	%	7.89	%	15,000	14,701		15,525
CHG Companies Inc.
6440 South Millrock Drive, Suite 175
Salt Lake City, UT 84121	Healthcare Services	Second lien	11.25% (L + 950/Q)(7)	4/7/2017	12.5	%	18.87	%	10,000	9,809		10,225
Datatel, Inc.
4375 Fair Lakes Court
Fairfax, VA 22033	Software	Second lien	8.75% (L + 725/Q)(7)	2/19/2018	10.5	%	3.33	%	5,000	4,975		5,075
Education Management LLC(4)
210 Sixth Avenue, 33rd Floor
Pittsburgh, PA 15222	Education	First lien	—	6/1/2012	N/A		2.63	%	3,000	(1,215	)	(195	)
KeyPoint Government Solutions, Inc.
1750 Foxtail Drive
Loveland, CO 80538	Federal Services	First lien	10.00% (L + 800/Q)(7)	12/31/2015	11.4	%	30.00	%	17,955	17,606		17,865

Name / Address of Portfolio Company	Industry	Type of Investment	Interest Rate(1)

Kronos Incorporated(4)
297 Billerica Road
Chelmsford, MA 01824	Software	First lien	—	6/11/2013	N/A		7.00	%	4,199	(630	)	(226	)
Learning Care Group (US), Inc.(5)		First lien	12.00%	4/27/2016	12.6	%	8.68	%	17,368	17,071		17,368
21333 Haggerty Rd., Suite 300		Subordinated	15.00%	6/30/2016	16.9	%	5.15	%	2,832	2,619		2,700
Novi, MI 48375	Education	Warrants	—	—	0.0	%	N/A		—	194		110
LVI Services, Inc.
80 Broad Street, 3rd Floor
New York, NY 10004	Industrial Services	First lien	9.25% (Base Rate + 750/Q)(6)(7)	3/31/2014	26.1	%	7.09	%	5,152	4,493		3,607
Mach Gen, LLC(5)
9300 U.S. Highway 9W
Athens, NY 12105	Power Generation	Second lien	7.82% (L + 750/Q)	2/22/2015	16.4	%	0.92	%	11,372	8,908		9,130
Managed Health Care Associates, Inc.
25-B Vreeland Road, Suite 300		First lien	3.50% (L + 325/M)	8/1/2014	6.3	%	15.46	%	22,468	17,728		21,794
Florham Park, NJ 07932	Healthcare Services	Second lien	6.75% (L + 650/M)	2/1/2015	11.2	%	15.79	%	15,000	11,386		13,950
Merge Healthcare Inc.
6737 W. Washington St., Suite 2250
Milwaukee, WI 53214	Healthcare Services	First lien	11.75%	5/1/2015	9.6	%	5.50	%	11,000	10,819		11,935
Merrill Communications LLC
One Merrill Circle
St. Paul, MN 55108	Business Services	First lien	7.50% (L + 550/M)(7)	12/22/2012	7.7	%	2.97	%	11,422	9,534		11,422
Ozburn-Hessey Holding Company LLC
7101 Executive Center Drive, Suite 333
Brentwood, TN 37027	Logistics	Second lien	10.50% (L + 850/Q)(7)	10/8/2016	11.6	%	8.00	%	6,000	5,879		6,090
Physiotherapy Associates, Inc./
Benchmark Medical, Inc.
855 Springdale Drive, Suite 200
Exton, PA 19341	Healthcare Facilities	First lien	7.50% (P + 425/Q)(7)	6/28/2013	7.6	%	2.78	%	3,815	3,114		3,820
PODS Holding Funding Corp.(5)
5585 Rio Vista Drive
Clearwater, FL 33760	Consumer Services	Subordinated	16.64%	12/23/2015	20.8	%	40.00	%	11,664	10,179		10,311
RGIS Services, LLC(4)
2000 East Taylor Rd.
Auburn Hills, MI 48326	Business Services	First lien	—	4/30/2013	N/A		6.67	%	5,000	(2,850	)	(269	)

Name / Address of Portfolio Company	Industry	Type of Investment	Interest Rate(1)

SonicWALL, Inc.
2001 Logic Drive
San Jose, CA 95124	Software	Second lien	12.00% (L + 1000/M)(7)	1/23/2017	13.3	%	9.52	%	10,000	9,720	10,150
SSI Investments II Limited
107 Northeastern Blvd.
Nashua, NH 03062	Education	Subordinated	11.13%	6/1/2018	9.1	%	2.26	%	7,000	7,063	7,875
Stratus Technologies, Inc.		First lien	12.00%	3/29/2015	15.3	%	3.26	%	7,000	6,604	6,484
111 Powdermill Road		Ordinary shares	—	—	0.0	%	N/A		—	65	56
Maynard, MA 01754	Information Technology	Preferred shares	—	—	0.0	%	N/A		—	15	13
Sunquest Information Systems, Inc.
250 South Williams Blvd.
Tucson, AZ 85711	Healthcare Services	Second lien	9.75% (L + 850/Q)(7)	6/16/2017	11.1	%	3.67	%	9,000	8,824	9,315
Trident Exploration Corp.
1000, 444 - 7 Avenue SW
Calgary, Alberta T2P 0X8	Energy	First lien	12.50% (L + 950/Q)(7)	6/30/2014	10.8	%	1.10	%	3,369	3,283	3,571
Vertafore, Inc.
11724 NE 195th Street
Bothell, WA 98011	Software	Second lien	9.75% (L + 825/Q)(7)	10/29/2017	11.3	%	3.85	%	10,000	9,904	10,200
Vision Solutions, Inc.
17911 Von Karman, Suite 500
Irvine, CA 92614	Software	Second lien	9.50% (L + 800/M)(7)	7/23/2017	11.4	%	13.33	%	12,000	11,880	12,060
Volume Services America, Inc. (Centerplate)
2187 Atlantic Street
Stamford, CT 06902	Consumer Services	First lien	10.50% (Base Rate + 850/Q)(6)(7)	9/16/2016	11.8	%	7.18	%	14,925	14,504	15,018

Total(3)									311,058	258,076	282,973

Notes:
(1): All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR (L) or the Prime Rate (P) and which resets quarterly (Q) or monthly (M). For each debt investment we have provided the current interest rate in effect as of March 31, 2011, or the LIBOR option if it is expected that the borrower will elect LIBOR financing at the next repricing date.
(2): Assumes that the investments in the Operating Company's portfolio as of a certain date, the Portfolio Date, are purchased at fair value on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity. Also assumes that unfunded revolvers remain undrawn. Interest income is assumed to be received quarterly for all debt securities. For floating rate debt securities, the interest rate is calculated by adding the spread to the projected three-month LIBOR at each respective quarter, which is determined based on the forward three-month LIBOR curve per Bloomberg as of the Portfolio Date. This calculation excludes the impact of existing leverage.
(3): As of March 31, 2011, the fair value of our existing assets was estimated to exceed their adjusted tax basis for federal income tax purposes by approximately $31.4 million (such excess is referred to herein as the "built-in gains"). The structure resulting from the formation transactions is expected to generally result in any distributions (including deemed distributions) made to AIV Holdings' sole stockholder, Guardian AIV, which are attributable to the built-in gains (generally determined as of the cut-off date) in assets contributed by Guardian AIV to the Operating Company, being treated as taxable dividends.
(4): Revolving credit facilities are fully undrawn.
(5): All or a portion of the interest can be deferred through PIK interest.
(6): The base rate and spread is a blended interest rate. The base rate is determined by reference to both LIBOR and Prime Rate.
(7): The investment has a LIBOR floor.

Set forth below is a brief description of each portfolio company in which the Operating Company had made an investment that represents greater than 5% of the Operating Company's total assets as of March 31, 2011.

Managed Health Care Associates, Inc.

MHA is a provider of contract purchasing services to long-term care hospitals and other alternate site pharmacy markets. Members utilize MHA services to assist in the purchasing of a complete line of pharmaceuticals, medical supplies, capital equipment and nutritional food, as well as network access to the majority of the largest national and regional prescription drug plans managing the Medicare Part D drug benefit.

SENIOR LOAN FUNDING PORTFOLIO COMPANIES

The following table sets forth certain information as of March 31, 2011, for each portfolio company in which SLF had a debt investment. We do not "control" nor are we an "affiliate" of any of SLF's portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would "control" a portfolio company if we owned more than 25% of its voting securities and would be an "affiliate" of a portfolio company if we owned five percent or more of its voting securities.

Name / Address of Portfolio Company	Industry	Type of Investment	Interest Rate(1)

Asurion, LLC
648 Grassmere Park, Suite 300
Nashville, TN 37211	Business Services	First lien	6.75% (L + 525/Q)	3/31/2015	1.44	%	12,968	12,487	13,155
Bartlett Holdings, Inc.
60 Industrial Park Road
Plymouth, MA 02360	Industrial Services	First lien	6.75% (L + 500/Q)	11/23/2016	6.19	%	5,985	5,928	6,022
Brickman Group Holdings, Inc.(2)
375 South Flowers Mill Road
Langhorne, PA 19047	Business Services	First lien	7.25% (L + 550/Q)	10/14/2016	0.55	%	2,993	3,027	3,055
Decision Resources, LLC
8 Executive Mall Rd.
Burlington, MA 01803	Business Services	First lien	7.00% (L + 550/Q)	12/28/2016	10.59	%	17,955	17,693	17,977
Fibertech Networks, LLC
(f/k/a Firefox Merger Sub, LLC)
300 Meridian Centre
Rochester, NY 14618	Telecommunication	First lien	6.75% (L + 500/Q)	11/30/2016	5.11	%	11,970	11,798	12,209
Focus Brands Inc.
200 Glenridge Point Parkway, Suite 200
Atlanta, GA 30342	Franchises	First lien	5.25% (Base Rate + 400/Q)(3)	11/5/2016	2.36	%	5,906	5,906	5,983
Hyland Software, Inc.
28500 Clemens Road
Westlake, OH 44145	Software	First lien	5.75% (L + 425/Q)	12/19/2016	3.90	%	7,980	7,980	8,005
LANDesk Software, Inc
698 West 10000 South, Suite 500
South Jordan, UT 84095	Software	First lien	7.00% (Base Rate + 523/M)(3)	3/28/2016	15.00	%	15,000	14,713	14,719
Mailsouth, Inc
5901 Highway 52 East
Helena, AL 35080	Media	First Lien	6.75% (Base Rate + 499/S)(3)	12/14/2016	10.91	%	12,000	11,825	12,060
MLM Holdings, Inc.
108 Fuller Street
Brookline, MA 02446	Software	First lien	7.00% (L + 525/Q)	12/1/2016	10.00	%	14,925	14,710	14,962

Name / Address of Portfolio Company	Industry	Type of Investment	Interest Rate(1)(4)

Research Pharmaceutical Services, Inc.
520 Virginia Drive
Fort Washington, PA 19034	Healthcare Services	First lien	6.75% (L + 525/Q)	2/18/2017	9.38	%	7,500	7,389	7,463
Smile Brands Group Inc.
201 East Sandpointe							��
Santa Ana, CA 92707	Healthcare Services	First lien	7.00% (Base Rate + 525/Q)(3)	12/21/2017	7.29	%	17,456	17,200	17,500
SonicWALL, Inc.(2)
2001 Logic Dr.
San Jose, CA 95124	Software	First lien	8.27% (Base Rate + 619/M)(3)	1/23/2016	3.23	%	4,034	4,053	4,070
Source Media Inc. and Accuity Inc.
One State Street Plaza, 25th Floor
New York, NY 10004	Business Services	First lien	6.50% (L + 500/Q)	1/24/2017	1.38	%	1,986	1,967	2,006
TravelCLICK, Inc.
300 North Martingale, Suite 500
Schaumburg, Illinois 60173	Information Services	First lien	6.50% (L + 500/M)	3/16/2016	10.31	%	16,500	16,172	16,418
Virtual Radiologic Corporation
11995 Singletree Lane, Suite 500
Eden Prairie, MN 55344	Healthcare Information Technology	First lien	7.75% (P + 450/Q)	12/22/2016	6.57	%	13,965	13,761	13,930
Wyle Services Corporation(2)
1960 East Grand Ave, Suite 900
El Segundo, CA	Federal Services	First lien	7.75% (L + 575/Q)	3/25/2016	2.59	%	7,462	7,489	7,514

Total							176,585	174,098	177,048

(1): All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR (L) or the Prime Rate (P) and which resets quarterly (Q), monthly (M), or semi-annually (S). For each debt investment we have provided the current interest rate in effect as of March 31, 2011, or the LIBOR option if it is expected that the borrower will elect LIBOR financing at the next repricing date.
(2): Debt investments were initially owned by the Predecessor Entities and were contributed to SLF at fair value in return for an equity interest.
(3): The base rate and spread is a blended interest rate. The base rate is determined by reference to both LIBOR and Prime Rate.
(4): All investments have a LIBOR floor.

MANAGEMENT

The business and affairs of AIV Holdings are managed under the direction of its board of directors. AIV Holdings' board of directors appoints its officers, who serve at the discretion of the board of directors. The board of directors has an audit committee, a nominating and corporate governance committee, a compensation committee and a valuation committee and may establish additional committees from time to time as necessary.

The business and affairs of the Operating Company are managed under the direction of a separate board of directors that will be elected by the members of the Operating Company voting on a pass through basis. As a result, the partners in Guardian AIV and New Mountain Finance's stockholders will elect the Operating Company's board of directors. The responsibilities of the Operating Company's board of directors include, among other things, the oversight of its investment activities, the quarterly valuation of its assets and oversight of the Operating Company's financing arrangements. The board of directors of the Operating Company has an audit committee, a nominating and corporate governance committee and a valuation committee and may establish additional committees from time to time as necessary. The initial board of directors of the Operating Company will be comprised of the same individuals as New Mountain Finance's board of directors, and under the LLC Agreement the Operating Company will be required to endeavor to nominate the same slate of director nominees for election by its members. However, there can be no assurances that the board composition of the Operating Company will remain the same as AIV Holdings' following the completion of the initial public offering.

Board of Directors and Executive Officers

AIV Holdings' board of directors consists of five members, three of whom are classified and under Section 2(a)(19) of the 1940 Act as non-interested persons. Pursuant AIV Holdings' certificate of incorporation, AIV Holdings' directors will be divided into three classes. Each class of directors will hold office for a three-year term. However, the initial members of the three classes have initial terms of one, two and three years, respectively. At each annual meeting of AIV Holdings' stockholders, the successors to the class of directors whose terms expire at such meeting will be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies. AIV Holdings' certificate of incorporation also gives its board of directors sole authority to appoint directors to fill vacancies that are created either through an increase in the number of directors or due to the resignation, removal or death of any director. Over time, following the consummation of the initial public offering, AIV Holdings intends to increase the size of its board of directors to seven directors and appoint two new directors, including one new independent director.

Directors

Information regarding AIV Holdings' board of directors is set forth below. The directors have been divided into two groups — independent directors and interested directors. Interested directors are "interested persons" of AIV Holdings as defined in Section 2(a)(19) of the 1940 Act. The

address for each director is c/o New Mountain Finance AIV Holdings Corporation, 787 7th Avenue, 48th Floor, New York, NY 10019.

Name		Position

Independent Directors
David Ogens	56	Director	2011	2012
Alfred F. Hurley, Jr.	56	Director	2011	2013
Kurt J. Wolfgruber	60	Director	2011	2014
Interested Directors
Steven B. Klinsky	54	Chairman of the Board of Directors	2011	2014
Robert A. Hamwee	41	Chief Executive Officer and Director	2011	2013

Executive Officers Who Are Not Directors

Information regarding AIV Holdings' executive officers who are not directors is set forth below.

Name		Position

Adam B. Weinstein	32	Chief Financial Officer and Treasurer
Paula Bosco	38	Chief Compliance Officer and Corporate Secretary

The address for each executive officer is c/o New Mountain Finance AIV Holdings Corporation, 787 7th Avenue, 48th Floor, New York, NY 10019.

Biographical Information

Directors

Each of AIV Holdings' directors has demonstrated high character and integrity, superior credentials and recognition in his respective field and the relevant expertise and experience upon which to be able to offer advice and guidance to AIV Holdings' management. Each of AIV Holdings' directors also has sufficient time available to devote to the affairs of AIV Holdings', is able to work with the other members of the board of directors and contribute to AIV Holdings' success and can represent the long-term interests of AIV Holdings' stockholders as a whole. AIV Holdings has selected its current directors to provide a range of backgrounds and experience to its board of directors. Set forth below is biographical information for each director, including a discussion of the director's particular experience, qualifications, attributes or skills that led AIV Holdings to conclude, as of the date of this document, that the individual should serve as a director, in light of AIV Holdings' business and structure.

Independent Directors

David Ogens has been a director of AIV Holdings since March 2011 and a director of New Mountain Finance and the Operating Company since November 2010 and is currently a private investor and served as Senior Managing Director and Head of Investment Banking at Leerink Swann LLC, a specialized healthcare investment bank focused on emerging growth healthcare companies, from 2005 to 2009. Prior to serving at Leerink Swann LLC, Mr. Ogens was Chairman and Co-Founder of SCS Financial Services, LLC, a private wealth management firm. Before co-founding SCS Financial Services, LLC in 2002, Mr. Ogens was a Managing Director in the Investment Banking Division of Goldman, Sachs & Co, where he served as a senior investment banker and a head of the High Technology Investment Banking Group. Mr. Ogens currently serves

100

on the Board of Directors of Apptis, Inc., a private government IT services firm, which is a portfolio company of New Mountain Capital, L.L.C. Mr. Ogens received his B.A. and M.B.A from the University of Virginia.

Mr. Ogens' brings his experience in wealth management and investment banking, including experience with debt issuances, as well as industry-specific expertise in the healthcare industry to AIV Holdings' board of directors. This background positions Mr. Ogens well to serve as a director of AIV Holdings.

Kurt J. Wolfgruber has been a director of AIV Holdings since March 2011 and a director of New Mountain Finance and the Operating Company since November 2010, and is currently a private investor and served as President of OppenheimerFunds, Inc., an investment management company, from March 2007 until his departure in May of 2009, during which time he was responsible for OppenheimerFunds, Inc.'s Retail and Wealth Management business units. During such period, Mr. Wolfgruber also served as Chief Investment Officer, overseeing the direction of OppenheimerFunds, Inc.'s investment organization and directing the underlying investment process. Mr. Wolfgruber joined OppenheimerFunds, Inc. in April 2000 as Senior Investment Officer and Director of Domestic Equities, in which position he was responsible for the investment process of the assets managed by OppenheimerFunds, Inc.'s Domestic Equity Portfolio teams. In 2003, Mr. Wolfgruber was named Executive Vice President and Chief Investment Officer of OppenheimerFunds, Inc. with oversight responsibilities for all investment functions including equity and fixed income research and portfolio management, trading and risk management. Prior to joining OppenheimerFunds, Inc., Mr. Wolfgruber spent 26 years at JPMorgan Investment Management in various research, portfolio management and management leadership roles. Mr. Wolfgruber received his B.A. in Economics from Ithaca College and his M.B.A. from the University of Virginia. He is also a Chartered Financial Analyst.

Mr. Wolfgruber brings experience in portfolio management and his abilities as a chartered financial analyst to the board of directors of AIV Holdings. This background positions Mr. Wolfgruber well to serve as a director of AIV Holdings.

Alfred F. Hurley, Jr. has been a director of AIV Holdings since March 2011 and a director of New Mountain Finance and the Operating Company since November 2010 and currently is a Vice Chairman of Emigrant Bank and Emigrant Bancorp (collectively, the "Bank") where he has served since 2007 and 2009, respectively. His responsibilities at the Bank include advising the Bank's CEO on acquisitions and divestitures, asset/liability management, and new products. He is the Chairman of the Bank's Credit and Risk Management Committee and is the Bank's acting Chief Risk Officer. Before joining the Bank, Mr. Hurley was the Chief Executive Officer of M. Safra & Co., a private money management firm, from 2004 to 2007. Prior to joining M. Safra & Co., Mr. Hurley worked at Merrill Lynch ("ML") from 1976 to 2004. His most recent management positions included serving as Senior Vice President of ML & Co. and Head of Global Private Equity Investing, Managing Director and Head of Japan Investment Banking and Capital Markets, Managing Director and Co-Head of the Global Manufacturing and Services Group, and Managing Director and Head of the Global Automotive Aerospace and Transportation Group. As part of the management duties described above, he was a member of the Corporate and Institutional Client Group ("CICG") Executive Committee which had global responsibility for the firm's equity, debt, investment banking and private equity businesses, a member of the Japan CICG Executive Committee, and a member of the Global Investment Banking Management and Operating Group Committees. Mr. Hurley graduated from Princeton University with an A.B. in History, cum laude.

Mr. Hurley brings his experience in risk management as well as his experience in the banking and money management industries to the board of directors of AIV Holdings. This background positions Mr. Hurley well to serve as a director of AIV Holdings.

101

Interested Directors

Steven B. Klinskyhas served as Chairman of the Board of Directors of AIV Holdings since May 2011, Chairman of the Board of Directors of New Mountain Finance since July 2010 and Chairman of the Board of Directors of the Operating Company since September 2010. Mr. Klinsky is the Founder and a Managing Director of New Mountain and has served as New Mountain's Chief Executive Officer since its inception in 1999. Prior to 1999, Mr. Klinsky served as a General Partner and an Associate Partner with Forstmann Little & Co. and co-founded Goldman, Sachs & Co.'s Leveraged Buyout Group. He currently serves on the Board of Directors of Apptis, Inc., Connextions, Inc., Deltek, Inc., Inmar, Inc., Oakleaf Global Holdings, Inc., Overland Solutions, Inc., RedPrairie Holding, Inc. and Avantor Performance Materials Holdings, Inc. and has served on the Board of Directors of Strayer Education Inc., National Medical Health Card Systems, Inc. and Surgis, Inc. Mr. Klinsky received his B.A. in Economics and Political Philosophy from the University of Michigan. He received his M.B.A. from Harvard Business School and his J.D. from Harvard Law School.

From his experience as an executive or director of public and private companies of financial advisory and private equity companies, Mr. Klinsky brings broad financial advisory and investment management expertise to the board of directors. Mr. Klinsky's intimate knowledge of the business and operations of New Mountain, including the Predecessor Entities, as a Managing Director and Founder and Chief Executive Officer of New Mountain and his experience as a board member or chairman of other publicly-held companies positions him well to serve as a chairman of AIV Holdings' board of directors.

Robert A. Hamweehas served as AIV Holdings' Chief Executive Officer and President since May 2011, New Mountain Finance's Chief Executive Officer since July 2010 and President since March 2011 and the Operating Company's Chief Executive Officer since September 2010. Mr. Hamwee serves on the board of directors of all three companies. Mr. Hamwee has served as a Managing Director of New Mountain since 2008. Prior to joining New Mountain, Mr. Hamwee served as President of GSC Group, a leading institutional investment manager of alternative assets, where he had day-to-day responsibility for managing GSC's control distressed debt funds from 1999 to 2008. Prior to 1999, Mr. Hamwee held various positions at Greenwich Street Capital Partners, the predecessor to GSC Group, and with The Blackstone Group. Mr. Hamwee has chaired numerous Creditor Committees and Bank Steering Groups, and was formerly a director of a number of public and private companies, including Envirosource, Purina Mills, and Viasystems. Mr. Hamwee received his B.B.A. in Finance and Accounting from the University of Michigan.

Mr. Hamwee's depth of experience in managerial operational positions in investment management and financial services and as a member of other corporate boards of directors, as well as his intimate knowledge of the business and operations of the Operating Company, provides the board of directors valuable industry- and company-specific knowledge and expertise.

Executive Officers Who Are Not Directors

Adam B. Weinsteinhas served as Chief Financial Officer and Treasurer of AIV Holdings since May 2011, of New Mountain Finance since July 2010 and of the Operating Company since September 2010. Mr. Weinstein has served as a Director and the Controller of New Mountain since 2005. Prior to joining New Mountain in 2005, Mr. Weinstein was a Manager at Deloitte & Touche, LLP and worked in that firm's merger and acquisition and private equity investor services areas. Mr. Weinstein sits on a number of boards of directors for professional and non-profit organizations. Mr. Weinstein received his B.S. from Binghamton University, is a member of the AICPA and is a New York State Certified Public Accountant.

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Paula Boscohas served as Chief Compliance Officer and Corporate Secretary of AIV Holdings since May 2011, of New Mountain Finance since July 2010 and of the Operating Company since September 2010. Ms. Bosco has served as a Director of New Mountain since 2009. Prior to joining New Mountain in 2009, Ms. Bosco served as the advisory Chief Compliance Officer for Lehman Brothers Inc. from 2007 to 2009. From 2005 to 2007, Ms. Bosco served as Senior Vice President and Assistant Director of International & Investment Advisory Services Compliance at Citigroup Global Markets, Inc. Prior to that, Ms. Bosco held a number of senior legal and regulatory compliance positions with investment banks and financial regulators, as well as with a large New York City law firm. Ms. Bosco received her B.A. in Political Science from the State University of New York, her J.D. from the City University of New York School of Law and her M.B.A. in Finance/Investment Management from Pace University. She is admitted to practice law in the U.S. District Court, Eastern and Southern Districts of New York, and the U.S. Court of Appeals, Second Circuit.

Board Leadership Structure

AIV Holdings' board of directors monitors and performs an oversight role with respect to AIV Holdings' business and affairs, compliance with regulatory requirements and the services, expenses and performance of service providers to AIV Holdings. Among other things, AIV Holdings' board of directors approves the appointment of officers, reviews and monitors the services and activities performed by officers and approves the engagement, and reviews the performance of, AIV Holdings' independent public accounting firm.

Under AIV Holdings' bylaws, AIV Holdings' board of directors may designate a chairman to preside over the meetings of the board of directors and meetings of the stockholders and to perform such other duties as may be assigned to him by the board. AIV Holdings does not have a fixed policy as to whether the chairman of the board should be an independent director and believes that it should maintain the flexibility to select the chairman and reorganize the leadership structure, from time to time, based on the criteria that is in the best interests of AIV Holdings and its stockholders at such times.

Mr. Klinsky currently serves as the chairman of AIV Holdings' board of directors. Mr. Klinsky is an "interested person" of AIV Holdings as defined in Section 2(a)(19) of the 1940 Act because he is a Managing Director and the Founder and Chief Executive Officer of New Mountain, serves on the investment committee of the Investment Adviser and is the managing member of the sole member of the Investment Adviser. AIV Holdings believes that Mr. Klinsky's history with New Mountain, including the Predecessor Entities, familiarity with our investment objectives and investment strategy, and extensive knowledge of the financial services industry and the investment valuation process in particular qualify him to serve as the chairman of AIV Holdings' board of directors. AIV Holdings believes that, at present, it is best served through this leadership structure, as Mr. Klinsky's relationship with the Investment Adviser and New Mountain provides an effective bridge and encourages an open dialogue between AIV Holdings' management and its board of directors, ensuring that both groups act with a common purpose.

AIV Holdings' board of directors does not currently have a designated lead independent director. AIV Holdings is aware of the potential conflicts that may arise when a non-independent director is chairman of the board, but believes these potential conflicts are offset by its strong corporate governance policies.

AIV Holdings recognizes that different board leadership structures are appropriate for companies in different situations. AIV Holdings intends to re-examine its corporate governance policies on an ongoing basis to ensure that they continue to meet its needs.

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Board's Role in Risk Oversight

AIV Holdings' board of directors performs its risk oversight function primarily through (1) its four standing committees which report to the entire board of directors, each of which are comprised solely of independent directors and (2) active monitoring by AIV Holdings' chief compliance officer and its compliance policies and procedures. In addition, AIV Holdings' board will rely on the risk oversight function of the Operating Company's board of directors.

AIV Holdings' audit committee and nominating and corporate governance committee assist its board of directors in fulfilling its risk oversight responsibilities. The audit committee's risk oversight responsibilities include overseeing AIV Holdings' accounting and financial reporting processes, its systems of internal controls regarding finance and accounting, and audits of AIV Holdings' financial statements, including the independence of AIV Holdings' independent accountants. The nominating and corporate governance committee's risk oversight responsibilities include selecting, researching and nominating directors for election by AIV Holdings' stockholders, developing and recommending to the board a set of corporate governance principles and overseeing the evaluation of the board and AIV Holdings' management. The valuation committee is responsible for making recommendations in accordance with the valuation policies and procedures adopted by the board of directors of AIV Holdings, reviewing valuations and any reports of independent valuation firms, confirming that valuations are made in accordance with the valuation policies of the board of directors of AIV Holdings and reporting any deficiencies or violations of such valuation policies to the board of directors on at least a quarterly basis, and reviewing other matters that the board of directors or the valuation committee deem appropriate.

AIV Holdings' board of directors will perform its risk oversight responsibilities with the assistance of the chief compliance officer. The board of directors will annually review a written report from the chief compliance officer discussing the adequacy and effectiveness of AIV Holdings' compliance policies and procedures and its service providers. The chief compliance officer's annual report will address at a minimum:

•: the operation of AIV Holdings' compliance policies and procedures and its service providers since the last report;
•: any material changes to these policies and procedures since the last report;
•: any recommendations for material changes to these policies and procedures as a result of the chief compliance officer's annual review; and
•: any compliance matter that has occurred since the date of the last report about which the board of directors would reasonably need to know to oversee AIV Holdings' compliance activities and risks.

In addition, the chief compliance officer will meet separately in executive session with the independent directors at least once each year.

AIV Holdings believes that its board's role in risk oversight will be effective, and appropriate given the extensive regulation to which it will be subject as a business development company. Following AIV Holdings' election to be treated as a business development company, AIV Holdings will be required to comply with certain regulatory requirements that control the levels of risk in AIV Holdings' business and operations. Because AIV Holdings will have no assets other than its ownership of common membership units of the Operating Company and will have no material long-term liabilities, AIV Holdings will look to the assets of the Operating Company for purposes of satisfying these requirements. For example, the Operating Company's ability to incur indebtedness will be limited because its asset coverage must equal at least 200% immediately after it incurs indebtedness, the Operating Company generally will have to invest at least 70% of its total assets in

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"qualifying assets" and will not generally be permitted to invest in any portfolio company in which one of its or AIV Holdings' affiliates currently has an investment. See "Regulation".

AIV Holdings recognizes that different board roles in risk oversight are appropriate for companies in different situations. AIV Holdings intends to re-examine the manners in which the board administers its oversight function on an ongoing basis to ensure that they continue to meet AIV Holdings' needs.

Committees of the AIV Holdings Board of Directors

AIV Holdings' board of directors has established the following committees. The members of each committee have been appointed by the board of directors and serve until their successor is elected and qualified, unless they are removed or resign.

Audit Committee

The audit committee is responsible for recommending the selection of, engagement of and discharge of AIV Holdings' independent accountants, reviewing the plans, scope and results of the audit engagement with the independent accountants, approving professional services provided by the independent accountants (including compensation therefore), reviewing the independence of the independent accountants and reviewing the adequacy of AIV Holdings' internal control over financial reporting. The initial members of the audit committee are Alfred Hurley, David Ogens and Kurt Wolfgruber, each of whom is not an interested person of AIV Holdings for purposes of the 1940 Act. Kurt Wolfgruber serves as the chairman of the audit committee, and AIV Holdings' board of directors has determined that Alfred Hurley, David Ogens and Kurt Wolfgruber are "audit committee financial experts" as defined under SEC rules.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee is responsible for determining criteria for service on the board, identifying, researching and nominating directors for election, selecting nominees to fill vacancies on AIV Holdings' board of directors or a committee of the board, developing and recommending to the board of directors a set of corporate governance principles and overseeing the self-evaluation of the board of directors and its committees and evaluation of AIV Holdings' management. The nominating and corporate governance committee considers nominees properly recommended by AIV Holdings' stockholders. The initial members of the nominating and corporate governance committee are Alfred Hurley, David Ogens and Kurt Wolfgruber, each of whom is not an interested person of AIV Holdings for purposes of the 1940 Act. Kurt Wolfgruber serves as the chairman of the nominating and corporate governance committee.

Compensation Committee

The compensation committee is responsible for periodically reviewing director compensation and recommending any appropriate changes to the board of directors. In addition, although AIV Holdings does not directly compensate its executive officers currently, to the extent that it does so in the future, the compensation committee would also be responsible for reviewing and evaluating their compensation and making recommendations to the board of directors regarding their compensation. Lastly, the compensation committee produces a report on AIV Holdings' executive compensation practices and policies for inclusion in our proxy statement if required by applicable proxy rules and regulations and, if applicable, makes recommendations to the board of directors on AIV Holdings' executive compensation practices and policies. The compensation committee is composed of Alfred Hurley, David Ogens and Kurt Wolfgruber, each of whom is not an

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interested person of AIV Holdings for purposes of the 1940 Act. Alfred Hurley serves as chairman of the compensation committee.

Valuation Committee

AIV Holdings' board of directors has established a valuation committee. Each member of the valuation committee will be appointed by AIV Holdings' board of directors and serve until such member's successor is elected and qualified, unless such member fails to qualify, retires, is removed or resigns. The valuation committee is responsible for making recommendations in accordance with the valuation policies and procedures adopted by the board of directors of AIV Holdings, reviewing valuations and any reports of independent valuation firms, confirming that valuations are made in accordance with the valuation policies of the board of directors of AIV Holdings and reporting any deficiencies or violations of such valuation policies to the board of directors on at least a quarterly basis, and reviewing other matters that the board of directors or the valuation committee deem appropriate. The valuation committee is initially composed of Alfred Hurley, David Ogens and Kurt Wolfgruber, each of whom is not an interested person of AIV Holdings for purposes of the 1940 Act. David Ogens serves as chairman of the valuation committee.

Board of Directors of Operating Company

The Operating Company's board of directors performs the same functions as AIV Holdings' board of directors, including with respect to risk oversight, and, in addition to such functions, also monitors and performs an oversight role with respect to investment practices and performance of our portfolio. The Operating Company's board approves the appointment of the Investment Adviser, Administrator and the Operating Company officers and reviews and monitors the services and activities performed by them on behalf of the Operating Company.

Audit and Nominating and Corporate Governance Committees

The Operating Company's board of directors has established audit and nominating and corporate governance committees. The Operating Company's audit and nominating and corporate governance committees will perform similar functions as AIV Holdings' audit and nominating and corporate governance committees and will initially be comprised of the same members as AIV Holdings' audit and nominating and corporate governance committees.

Valuation Committee

The Operating Company's board of directors has established a valuation committee. Each member of the valuation committee will be appointed by the Operating Company's board of directors and serve until such member's successor is elected and qualified, unless such member fails to qualify, retires, is removed or resigns. The valuation committee is responsible for making recommendations in accordance with the valuation policies and procedures adopted by the board of directors of the Operating Company, reviewing valuations and any reports of independent valuation firms, confirming that valuations are made in accordance with the valuation policies of the board of directors of the Operating Company and reporting any deficiencies or violations of such valuation policies to the board of directors on at least a quarterly basis, and reviewing other matters that the board of directors or the valuation committee deem appropriate. The Operating Company's board of directors and valuation committee will have the authority to utilize the services of an independent valuation firm to help determine the fair value of these investments. The valuation committee is initially composed of Alfred Hurley, David Ogens and Kurt Wolfgruber, each of whom is not an interested person of the Operating Company for purposes of the 1940 Act. David Ogens serves as chairman of the valuation committee.

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Compensation of Directors

The independent directors of New Mountain Finance receive an annual retainer fee of $75,000 and will further receive a fee of $2,500 for each regularly scheduled board meeting and a fee of $1,000 for each special board meeting as well as reimbursement of reasonable and documented out-of-pocket expenses incurred in connection with attending each board meeting. In addition, the chairman of the audit committee will receive an annual retainer of $7,500, while the chairman of the valuation committee, the chairman of the compensation committee and the chairman of the nominating and corporate governance committee will receive annual retainers of $5,000, $1,000 and $1,000, respectively. All fees payable to New Mountain Finance's directors will be paid by the Operating Company. The directors of the Operating Company and AIV Holdings are not paid any additional amounts.

No compensation is paid to directors who are interested persons of New Mountain Finance and AIV Holdings as defined in the 1940 Act. In addition, no compensation is paid to directors of the Operating Company.

Compensation of Executive Officers

None of New Mountain Finance's, AIV Holdings' or the Operating Company's executive officers receive direct compensation from New Mountain Finance or the Operating Company. The compensation of the principals and other investment professionals of the Investment Adviser is paid by the Investment Adviser. Compensation paid to New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer is set by the Administrator and is subject to reimbursement by the Operating Company of the allocable portion of such compensation for services rendered to New Mountain Finance and the Operating Company.

Indemnification Agreements

New Mountain Finance, AIV Holdings and the Operating Company have entered into indemnification agreements with their respective directors. The indemnification agreements are intended to provide the directors the maximum indemnification permitted under Delaware law and the 1940 Act. Each indemnification agreement provides that New Mountain Finance, AIV Holdings or the Operating Company, as applicable, shall indemnify the director who is a party to the agreement, or an Indemnitee, including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Delaware law and the 1940 Act.

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PORTFOLIO MANAGEMENT

The management of the Operating Company's investment portfolio is the responsibility of the Investment Adviser and its investment committee, which currently consists of Steven Klinsky, Robert Hamwee, Adam Collins, Douglas Londal and Alok Singh. We consider Mr. Hamwee to be the Operating Company's portfolio manager. The Investment Adviser's investment committee is responsible for approving all of the Operating Company's investments above $5 million. Investments and dispositions below $5 million may be approved by the Operating Company's Chief Executive Officer. These approval thresholds may change over time.

Investment Personnel

As of March 31, 2011, the Investment Adviser was supported by approximately 84 New Mountain staff members, including approximately 53 investment professionals (including 14 managing directors and 13 senior advisers) as well as 16 finance and operational professionals. These individuals, in addition to the Investment Adviser's investment committee, are primarily responsible for the day-to-day management of the Operating Company's portfolio. The Investment Adviser may retain additional investment professionals, based upon its needs, subsequent to the completion of the initial public offering.

Below are the biographies for selected senior investment professionals of the Investment Adviser, whose biographies are not included elsewhere in this document. For more information regarding the business experience of Messrs. Klinsky and Hamwee, see "Management — Biographical Information — Directors — Interested Directors".

Adam J. Collins will serve on the Investment Adviser's investment committee and serves as Chief Financial Officer and a Managing Director of New Mountain. Prior to joining New Mountain in 2001, Mr. Collins worked at Goldman, Sachs & Co. from 1996 to 2000 in the controllers group and in 2001 in the Real Estate Principal Investment area. Prior to 1996, Mr. Collins worked at KPMG from 1994 to 1996. He serves on the Board of Directors of Apptis, Inc. and Connextions, Inc. Mr. Collins received his B.S. in Accounting from Babson College.

Douglas F. Londalwill serve on the Investment Adviser's investment committee and serves as a Managing Director of New Mountain. Prior to joining New Mountain in 2004, Mr. Londal held various positions within Goldman, Sachs & Co. and its affiliates, including serving as a Managing Director in the Principal Investment Area from 1995 to 2004 and as a member of the Mergers & Acquisitions Department from 1991 to 1995. While in the Principal Investment Area, Mr. Londal held various positions including co-head of Merchant Banking in the Americas and co-head of the Mezzanine investing effort in the Americas. Mr. Londal serves on the Board of Directors of Connextions, Inc., Inmar, Inc., NuSil Technology LLC and Oakleaf Global Holdings, Inc. Mr. Londal received his B.A. in Economics from the University of Michigan. He received his M.B.A. from the University of Chicago Graduate School of Business.

Alok Singhwill serve on the Investment Adviser's investment committee and serves as a Managing Director of New Mountain. Prior to joining New Mountain in 2002, Mr. Singh served as a Partner and Managing Director of Bankers Trust. He also established and led the Corporate Financial Advisory Group for the Americas for Barclays Capital. Mr. Singh is non-executive Chairman of RedPrairie Holding, Inc. and Overland Solutions, Inc., lead director of Camber Corporation, Deltek, Inc., Ikaria Holdings, Inc., and Stroz Friedberg LLC and serves on the Boards of Directors of Apptis, Inc., EverBank Financial Corp., Validus Holdings, Ltd., and Avantor Performance Materials, Inc. Mr. Singh received both his B.A. in Economics and History and his M.B.A. in Finance from New York University.

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John R. Klinehas served as a Director of New Mountain since 2008. Prior to joining New Mountain, he worked at GSC Group from 2001 to 2008 as an investment analyst and trader for GSC Group's control distressed and corporate credit funds. From 1999 to 2001, Mr. Kline was with Goldman, Sachs & Co. where he worked in the Credit Risk Management and Advisory Group. Mr. Kline received an A.B. degree in History from Dartmouth College.

James W. Stone IIIhas served as a Director of New Mountain since 2011. Prior to joining New Mountain, he worked for The Blackstone Group as a Managing Director of GSO Capital Partners. At Blackstone, Mr. Stone was responsible for originating, analyzing, evaluating, executing and monitoring various senior secured and mezzanine debt investments across a variety of industries. Before joining Blackstone in 2002, Mr. Stone worked as a Vice President in Lehman Brothers' Communications and Media Group and as a Vice President in UBS Warburg's Leveraged Finance Department. Prior to that, Mr. Stone worked at Nomura Securities International, Inc. with the team that later founded Blackstone's corporate debt investment unit. Mr. Stone received a B.S. in Mathematics and Physics from The University of the South and an M.B.A. with concentrations in finance and accounting from The University of Chicago's Graduate School of Business.

The table below shows the dollar range of shares of New Mountain Finance common stock to be beneficially owned by the Operating Company's portfolio manager. Mr. Hamwee will not beneficially own any shares of AIV Holdings.

Name of Portfolio Manager		Dollar Range of Equity Securities of New Mountain Finance(1)(2)(3)

Robert Hamwee			$500,001 - $1,000,000

(1): The dollar range of equity securities beneficially owned by the Operating Company's portfolio manager is based on an assumed initial public offering price of $14.50 per share (the mid-point of the range set forth on the cover of this document).
(2): The dollar range of equity securities beneficially owned are: none, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, $100,001 – $500,000, $500,001 – $1,000,000 or over $1,000,000.
(3): Does not include any shares that may be acquired by officers or directors in connection with New Mountain Finance's directed share program.

Mr. Hamwee is not primarily responsible for the day-to-day management of any other portfolio other than the portfolio of the Operating Company. Mr. Hamwee is a Managing Director of New Mountain, which as of March 31, 2011 had more than $9.0 billion (including the Operating Company) of assets under management (which includes amounts committed, not all of which have been drawn down and invested to date) used to calculate New Mountain's management fees related to such funds. See "Risk Factors — Risks Relating to Our Business — The Investment Adviser has significant potential conflicts of interest with AIV Holdings and the Operating Company, consequently, Guardian AIV's interest as sole stockholder of AIV Holdings, which could adversely impact our investment returns".

Compensation

None of the Investment Adviser's investment professionals will be employed by AIV Holdings or the Operating Company or will receive any direct compensation from AIV Holdings or the Operating Company in connection with the management of the Operating Company's portfolio. Mr. Klinsky, through his financial interest in the Investment Adviser, is entitled to a portion of any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.

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INVESTMENT MANAGEMENT AGREEMENT

Following the completion of the initial public offering, AIV Holdings and the Operating Company will be closed-end, non-diversified management investment companies that have elected to be treated as business development companies under the 1940 Act. AIV Holdings will be a holding company with no direct operations of its own, and its only business and sole asset will be its ownership of common membership units of the Operating Company. As a result, AIV Holdings will not pay any external investment advisory or management fees. However, the Operating Company will be externally managed by the Investment Adviser and will pay the Investment Adviser a fee for its services. The following summarizes the arrangements between the Operating Company and the Investment Adviser pursuant to the Investment Management Agreement.

Overview of the Investment Adviser

Management Services

The Investment Adviser is registered as an Investment Adviser under the Investment Advisers Act of 1940, or the Advisers Act. The Investment Adviser will serve pursuant to the Investment Management Agreement in accordance with the 1940 Act. Subject to the overall supervision of the Operating Company's board of directors, the Investment Adviser will manage the Operating Company's day-to-day operations and provide it with investment advisory and management services. Under the terms of the Investment Management Agreement, the Investment Adviser will:

•: determine the composition of the Operating Company's portfolio, the nature and timing of the changes to the Operating Company portfolio and the manner of implementing such changes;
•: determine what assets the Operating Company will purchase, retain or sell;
•: identify, evaluate and negotiate the structure of the investments the Operating Company makes;
•: execute, monitor and service the investments the Operating Company makes;
•: determine the securities and other assets that the Operating Company will purchase, retain or sell;
•: perform due diligence on prospective portfolio companies;
•: vote, exercise consents and exercise all other rights appertaining to such securities and other assets on behalf of the Operating Company; and
•: provide the Operating Company with such other investment advisory, research and related services as the Operating Company may, from time to time, reasonably require.

The Investment Adviser's services under the Investment Management Agreement are not exclusive, and the Investment Adviser (so long as its services to the Operating Company are not impaired) and/or other entities affiliated with New Mountain are permitted to furnish similar services to other entities.

Management Fee

The Operating Company will pay the Investment Adviser a fee for its services under the Investment Management Agreement consisting of two components — a base management fee and an incentive fee. The cost of both the base management fee payable to the Investment Adviser and any incentive fees paid in cash to the Investment Adviser will be borne by the Operating Company's members, including AIV Holdings and, as a result, will also indirectly be borne by Guardian AIV.

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Base Management Fee

The base management fee is calculated at an annual rate of 1.75% of the Operating Company's gross assets less (i) the borrowings under the SLF Credit Facility and (ii) cash and cash equivalents. The base management fee is payable quarterly in arrears, and is calculated based on the average value of the Operating Company's gross assets at the end of each of the two most recently completed calendar quarters, and appropriately adjusted on a pro rata basis for any equity capital raises or repurchases during the current calendar quarter. The base management fee for any partial quarter will be appropriately pro rated.

Incentive Fee

The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on the Operating Company's "Pre-Incentive Fee Adjusted Net Investment Income" for the immediately preceding calendar quarter. As of March 31, 2011 the total fair market value of the Operating Company's existing assets was estimated to exceed their total cost basis for GAAP purposes by approximately $27.8 million (such excess is referred to herein as the "GAAP built-in gain"). The formation transactions that will take place in connection with the initial public offering will not cause a step-up in the cost basis of the Operating Company's existing assets to fair market value under GAAP. Therefore, because the total value at the time of the offering of the Operating Company's assets is greater than its original purchase price, a greater amount of amortization of purchase discount or original issue discount will be recognized under GAAP in each period until such assets are sold or mature in the future. The Operating Company intends to keep track of the transferred value of each of its assets and for purposes of the incentive fee calculation, adjust "Pre-Incentive Fee Net Investment Income" to eliminate the effect of additional amortization of purchase discount or original issue discount taken into account in each period as a result of the lower original purchase price as compared to the transferred value. Including this adjustment, "Pre-Incentive Fee Net Investment Income" will be known as "Pre-Incentive Fee Adjusted Net Investment Income" for the sole purpose of calculating incentive fees. "Pre-Incentive Fee Net Investment Income" means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Operating Company receives from portfolio companies) accrued during the calendar quarter, minus the Operating Company's operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement with the Administrator, and any interest expense and distributions paid on any issued and outstanding preferred membership units, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Operating Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Adjusted Net Investment Income, expressed as a rate of return on the value of the Operating Company's net assets at the end of the immediately preceding calendar quarter, will be compared to a "hurdle rate" of 2% per quarter (8% annualized), subject to a "catch-up" provision measured as of the end of each calendar quarter. The Operating Company's net investment income used to calculate this part of the incentive fee is also included in the amount of the Operating Company's gross assets used to calculate the 1.75% base management fee. The operation of the incentive fee with respect to the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income for each quarter is as follows:

•: no incentive fee is payable to the Investment Adviser in any calendar quarter in which the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income does not exceed the hurdle rate of 2% (the "preferred return" or "hurdle").

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•: 100% of the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income with respect to that portion of such Pre-Incentive Fee Adjusted Net Investment Income, if any, that exceeds the hurdle rate but is less than or equal to 2.5% in any calendar quarter (10% annualized) is payable to the Investment Adviser. We refer to this portion of the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income (which exceeds the hurdle rate but is less than or equal to 2.5%) as the "catch-up". The "catch-up" provision is intended to provide the Investment Adviser with an incentive fee of 20% on all of the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income as if a hurdle rate did not apply when the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income exceeds 2.5% in any calendar quarter.
•: 20% of the amount of the Operating Company's Pre-Incentive Fee Adjusted Net Investment Income, if any, that exceeds 2.5% in any calendar quarter (10% annualized) is payable to the Investment Adviser once the hurdle is reached and the catch-up is achieved, (20% of all Pre-Incentive Fee Adjusted Net Investment Income thereafter is allocated to the Investment Adviser).

The following is a graphical representation of the calculation of the income-related portion of the incentive fee:

Quarterly Incentive Fee Based on "Pre-Incentive Fee Adjusted Net Investment Income"

Pre-Incentive Fee Adjusted Net Investment Income
(expressed as a percentage of the value of net assets)

Percentage of Pre-Incentive Fee Adjusted Net Investment
Income allocated to income-related portion of incentive fee

These calculations will be appropriately prorated for any period of less than three months and adjusted for any equity capital raises or repurchases during the current calendar quarter.

The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date), commencing on December 31, 2011, and will equal 20% of the Operating Company's "adjusted realized capital gains", if any, on a cumulative basis from inception through the end of each calendar year, computed net of all "adjusted realized capital losses" and "adjusted unrealized capital depreciation" on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees, provided that, the incentive fee determined as of December 31, 2011 will be calculated for a period of shorter than twelve calendar months to take into account any "adjusted realized capital gains" computed net of all "adjusted realized capital losses" and "adjusted unrealized capital depreciation" from inception. As of March 31, 2011, the total fair market value of the Operating Company's existing assets was estimated to exceed their total cost basis for GAAP purposes by approximately $27.8 million (such excess is referred to herein as the "GAAP built-in gain"). The formation transactions that will take place in connection with the initial public offering will not cause a step-up in the cost basis of the underlying assets to fair market

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value under GAAP. Therefore, because the value at the time of the offering of the Operating Company's assets is greater than its original purchase price, a greater amount of amortization of purchase discount or original issue discount will be recognized under GAAP for each asset in each period until such assets are sold or mature in the future. This will result in an accretion to cost basis that differs had the cost basis reset to the transferred fair market value at the time of the offering. As a result, in each period, the unrealized appreciation or depreciation will differ and at the time of sale of such an asset, the realized gain or loss could be greater or less depending on the original GAAP built-in gain, the amount of amortization already taken into account for GAAP purposes and the sale price. The Operating Company intends to keep track of the transferred value of each of its assets and for purposes of the second part of the incentive fee calculation, adjust realized capital gains, realized capital losses, unrealized appreciation and unrealized depreciation to remove the effect of the difference in cost basis and calculate these amounts "as-if" the GAAP built-in gain for each asset was zero at the time of the offering. For this purpose, the adjustments will be referred to for each category as "adjusted realized capital gains", "adjusted realized capital losses", "adjusted unrealized appreciation" and "adjusted unrealized depreciation" throughout this section.

New Mountain Finance and the Operating Company are seeking exemptive relief from the SEC to permit the Operating Company to pay 50%, on an after tax basis, of the incentive fee in common membership units of the Operating Company, which will be exchangeable into shares of New Mountain Finance's common stock on a one-for-one basis. If such exemptive relief is granted, the number of the Operating Company's common membership units payable to the Investment Adviser will be calculated based on the market price of New Mountain Finance's common stock and in accordance with such restrictions and conditions as may be required by the exemptive relief. However, if the market price of New Mountain Finance's common stock is less than the net asset value of such New Mountain Finance common stock with respect to any incentive fee payment due to the Investment Adviser, that incentive fee payment will be paid in cash. There can be no assurance that this exemptive relief will be granted. In addition, if New Mountain Finance and the Operating Company receive exemptive relief from the SEC to permit the Operating Company to pay 50%, on an after tax basis, of the incentive fee in common membership units of the Operating Company, any common membership units so received by the Investment Adviser will be subject to a 3-year lock-up agreement, pursuant to which one-third of the common membership units received by the Investment Adviser will be released from the lock-up on an annual basis until the expiration of each 3-year lock-up period. If exemptive relief is not granted, the Operating Company will pay the entire incentive fee in cash. If the Investment Management Agreement is terminated by the Operating Company, then the lock-up provisions with respect to any shares of New Mountain Finance common stock received by the Investment Adviser or its transferees pursuant to the Investment Management Agreement immediately expire.

Example 1: Income Related Portion of Incentive Fee for Each Calendar Quarter

Alternative 1

Assumptions

Investment income (including interest, dividends, fees, etc.) = 1.25%
Hurdle rate(1) = 2%
Management fee(2) = 0.44%
Other expenses (legal, accounting, safekeeping agent, transfer agent, etc.)(3) = 0.2%
Pre-Incentive Fee Adjusted Net Investment Income
(investment income – (management fee + other expenses)) = 0.61%

Pre-Incentive Fee Adjusted Net Investment Income does not exceed the hurdle rate, therefore there is no income-related incentive fee.

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Alternative 2

Assumptions

Investment income (including interest, dividends, fees, etc.) = 2.9%
Hurdle rate(1) = 2%
Management fee(2) = 0.44%
Other expenses (legal, accounting, safekeeping agent, transfer agent, etc.)(3) = 0.2%
Pre-Incentive Fee Adjusted Net Investment Income
(investment income – (management fee + other expenses)) = 2.26%

Incentive fee = 100% × Pre-Incentive Fee Adjusted Net Investment Income (subject to
        "catch-up")(4)
        = 100% × (2.26% – 2%)
        = 0.26%

Pre-Incentive Fee Adjusted Net Investment Income exceeds the hurdle rate, but does not fully satisfy the "catch-up" provision, therefore the income related portion of the incentive fee is 0.2%.

Alternative 3

Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.5%
Hurdle rate(1) = 2%
Management fee(2) = 0.44%
Other expenses (legal, accounting, safekeeping agent, transfer agent, etc.)(3) = 0.2%

Pre-Incentive Fee Adjusted Net Investment Income
(investment income – (management fee + other expenses)) = 2.86%

Incentive fee = 100% × Pre-Incentive Fee Adjusted Net Investment Income (subject to
"catch-up")(4)

(1): Represents 8% annualized hurdle rate.
(2): Assumes 1.75% annualized base management fee.
(3): Excludes organizational and offering expenses.
(4): The "catch-up" provision is intended to provide the Investment Adviser with an incentive fee of 20% on all Pre-Incentive Fee Adjusted Net Investment Income as if a hurdle rate did not apply when the Operating Company's net investment income exceeds 2.5% in any calendar quarter.

Incentive fee = 100% × "catch-up" + (20% × (Pre-Incentive Fee Adjusted Net Investment
Income – 2.5%))

Catch-up = 2.5% – 2%
= 0.5%

Incentive fee = (100% × 0.5%) + (20% × (2.86% – 2.5%))
                       = 0.5% + (20% × 0.36%)
                       = 0.5% + 0.07%
                       = 0.57%

Pre-Incentive Fee Adjusted Net Investment Income exceeds the hurdle rate, and fully satisfies the "catch-up" provision, therefore the income related portion of the incentive fee is 0.57%.

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Example 2: Capital Gains Portion of Incentive Fee(*):

Alternative 1:

Assumptions

Year 1: $20 million investment made in Company A ("Investment A"), and $30 million investment made in Company B ("Investment B")

Year 2: Investment A sold for $50 million and fair market value ("FMV") of Investment B determined to be $32 million

Year 3: FMV of Investment B determined to be $25 million

Year 4: Investment B sold for $31 million

The capital gains portion of the incentive fee would be:

Year 1: None

Year 2: Capital gains incentive fee of $6 million — ($30 million realized capital gains on sale of Investment A multiplied by 20%)

Year 3: None — $5 million (20% multiplied by ($30 million cumulative capital gains less $5 million cumulative capital depreciation)) less $6 million (previous capital gains fee paid in Year 2)

Year 4: Capital gains incentive fee of $200,000 — $6.2 million ($31 million cumulative realized capital gains multiplied by 20%) less $6 million (capital gains incentive fee taken in Year 2)

Alternative 2

Assumptions

Year 1: $20 million investment made in Company A ("Investment A"), $30 million investment made in Company B ("Investment B") and $25 million investment made in Company C ("Investment C")

Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined to be $25 million

Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million

Year 4: FMV of Investment B determined to be $35 million

Year 5: Investment B sold for $20 million

The capital gains incentive fee, if any, would be:

Year 1: None

Year 2: $5 million capital gains incentive fee — 20% multiplied by $25 million ($30 million realized capital gains on Investment A less unrealized capital depreciation on Investment B)

Year 3: $1.4 million capital gains incentive fee — $6.4 million (20% multiplied by $32 million ($35 million cumulative realized capital gains less $3 million unrealized capital depreciation)) less $5 million capital gains incentive fee received in Year 2

Year 4: None

Year 5: None — $5 million (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less $6.4 million cumulative capital gains incentive fee paid in Year 2 and Year 3(1)

*: The hypothetical amounts of returns shown are based on a percentage of the Operating Company's total net assets and assume no leverage. There is no guarantee that positive returns will be realized and actual returns may vary from those shown in this example.
(1): As noted above, it is possible that the cumulative aggregate capital gains fee received by the Investment Adviser ($6.4 million) is effectively greater than $5 million (20% of cumulative aggregate realized capital gains less net realized capital losses or net unrealized depreciation ($25 million)).

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Payment of Expenses

The Operating Company's primary operating expenses are the payment of a base management fee and any incentive fees under the Investment Management Agreement and the allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to New Mountain Finance and the Operating Company under the Administration Agreement. The Operating Company bears all other expenses of its and New Mountain Finance's operations and transactions, including (without limitation) fees and expenses relating to:

•: organizational and offering expenses;
•: the investigation and monitoring of the Operating Company's investments;
•: the cost of calculating net asset value, including the cost of any third-party valuation services;
•: interest payable on debt, if any, to finance its investments;
•: the cost of effecting sales and repurchases of shares of New Mountain Finance's common stock and other securities;
•: management and incentive fees payable pursuant to the Investment Management Agreement;
•: fees payable to third parties relating to, or associated with, making investments and valuing investments (including third-party valuation firms);
•: transfer agent and custodial fees;
•: fees and expenses associated with marketing efforts (including attendance at investment conferences and similar events);
•: federal and state registration fees;
•: any exchange listing fees;
•: federal, state, local and foreign taxes;
•: independent directors' fees and expenses;
•: brokerage commissions;
•: costs of proxy statements, stockholders' reports and notices;
•: costs of preparing government filings, including periodic and current reports with the SEC;
•: fees and expenses associated with independent audits and outside legal costs;
•: costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws;
•: fidelity bond, liability insurance and other insurance premiums; and
•: printing, mailing, independent accountants and outside legal costs and all other direct expenses incurred by either the Investment Adviser, New Mountain Finance or the Operating Company in connection with administering our business, including payments under the Administration Agreement that will be based upon New Mountain Finance's and the Operating Company's allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to New Mountain Finance and the Operating Company under the Administration Agreement, including the allocable portion of the compensation of New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer and their respective staffs.

Duration and Termination

The Investment Management Agreement was approved by the Operating Company's board of directors, including a majority of the directors who are not interested persons, on March 10, 2011

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and by a majority of the limited partners of Guardian AIV and New Mountain Guardian Partners, L.P. through a written consent first solicited on November 8, 2010. Unless earlier terminated as described below, the Investment Management Agreement will remain in effect for a period of two years from its effective date and will remain in effect from year-to-year thereafter if approved annually by the Operating Company's board of directors or by the affirmative vote of the holders of a majority of the Operating Company's outstanding voting securities, voting on a pass through basis, and the majority of the Operating Company's directors who are not interested persons. The Investment Management Agreement will automatically terminate in the event of its assignment. The Investment Management Agreement may be terminated by either party without penalty upon 60 days' written notice to the other. Any termination by the Operating Company must be authorized either by its board of directors or by vote of its members, voting on a pass through basis.

Indemnification

The Investment Management Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, the Investment Adviser and its officers, managers, agents, employees, controlling persons, members (or their owners) and any other person or entity affiliated with it, are entitled to indemnification from the Operating Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of the Investment Adviser's services under the Investment Management Agreement or otherwise as the Investment Adviser.

Organization of the Investment Adviser

The Investment Adviser is a Delaware limited liability company. The principal address of the Investment Adviser is 787 7th Avenue, 48th Floor, New York, NY 10019. The Investment Adviser is ultimately controlled by Steven B. Klinsky through Mr. Klinsky's interest in New Mountain Capital Group, L.L.C. Although the Investment Adviser's personnel have previously managed our portfolio, the Investment Adviser has never previously served as an investment adviser. See Risk Factors — Risks Relating to our Business — The Investment Adviser do not have any prior experience managing a business development company or a RIC, which could adversely affect our business.

Board Approval of the Investment Management Agreement

At a meeting of the Operating Company's board of directors held on March 10, 2011, the Operating Company's board of directors unanimously voted to approve the Investment Management Agreement and the Administration Agreement. In reaching a decision to approve the Investment Management Agreement and the Administration Agreement, the Operating Company's board of directors reviewed a significant amount of information and considered, among other things:

•: Services. The Operating Company's board of directors reviewed the nature, extent and quality of the investment advisory and management and administrative services proposed to be provided to the Operating Company by its advisers and found them sufficient to encompass the range of services necessary for the Operating Company's operation.
•: Comparison of Management Fee to Other Firms. The Operating Company's board of directors reviewed and considered to the extent publicly available, the management fee arrangements of companies with similar business models, including business development companies.
•: Experience of Management Team and Personnel. The Operating Company's board of directors considered the extensive experience of the members of the Investment Adviser's investment committee with respect to the specific types of investments the Operating Company proposes to make, and their past experience with similar kinds of investments.

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The Operating Company's board of directors discussed numerous aspects of the investment strategy with members of the Investment Adviser's investment committee and also considered the potential flow of investment opportunities resulting from the numerous relationships of the Investment Adviser's investment committee and investment professionals within the investment community.

•: Provisions of Investment Management Agreement. The Operating Company's board of directors considered the extent to which the provisions of the Investment Management Agreement (other than the fee structure which is discussed above) were comparable to the investment management agreements of companies with similar business models, including, peer group business development companies, and concluded that its terms were satisfactory and in line with market norms. In addition, the board of directors concluded that the services to be provided under the Investment Management Agreement were reasonably necessary for the Operating Company's operations, the services to be provided were at least equal to the nature and quality of those provided by others, and the payment terms were fair and reasonable in light of usual and customary charges.
•: Payment of Expenses. The Operating Company's board of directors considered the manner in which the Investment Adviser would be reimbursed for its expenses at cost and the other expenses for which it would be reimbursed under the Investment Management Agreement. The Operating Company's board of directors discussed how this structure was comparable to that of companies with similar business models, including existing business development companies.

Based on the information reviewed and the discussions among the members of the Operating Company's board of directors, the Operating Company's board of directors, including all of its directors who are not interested persons under the 1940 Act, concluded that the management fee rates were fair and reasonable in relation to the services to be provided and approved the Investment Management Agreement and the Administration Agreement as being in the best interests of the Operating Company.

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ADMINISTRATION AGREEMENT

The Operating Company has also entered into an Administration Agreement with the Administrator under which the Administrator provides administrative services for New Mountain Finance and the Operating Company, including arranging office facilities for New Mountain Finance and the Operating Company and providing office equipment and clerical, bookkeeping and recordkeeping services at such facilities. Under the Administration Agreement, the Administrator also performs, or oversees the performance of, New Mountain Finance's and the Operating Company's required administrative services, which includes being responsible for the financial records which New Mountain Finance and the Operating Company are required to maintain and preparing reports to New Mountain Finance's stockholders and reports filed with the SEC, which includes, but is not limited to, providing the services of New Mountain Finance's and the Operating Company's chief financial officer. In addition, the Administrator assists New Mountain Finance and the Operating Company in determining and publishing their respective net asset values, overseeing the preparation and filing of New Mountain Finance's tax returns and the printing and dissemination of reports to New Mountain Finance's stockholders, and generally overseeing the payment of New Mountain Finance's and the Operating Company's expenses and the performance of administrative and professional services rendered to New Mountain Finance and the Operating Company by others. For providing these services, facilities and personnel, the Operating Company reimburses the Administrator the allocable portion of overhead and other expenses incurred by it in performing its obligations to New Mountain Finance and the Operating Company under the Administration Agreement, including rent and New Mountain Finance's allocable portion of the costs of compensation and related expenses of New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer, and their respective staffs. The Administrator may also provide on the Operating Company's behalf managerial assistance to the Operating Company's portfolio companies. The Administration Agreement may be terminated by New Mountain Finance, the Operating Company or the Administrator without penalty upon 60 days' written notice to the other party. Amounts payable to the Administrator under the Administration Agreement will not exceed $3 million for the first year of the Administration Agreement.

The Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, the Administrator and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from New Mountain Finance and the Operating Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of services under the Administration Agreement or otherwise as administrator for New Mountain Finance and the Operating Company. Any amounts owing by New Mountain Finance pursuant to this indemnification obligation will be payable by the Operating Company.

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LICENSE AGREEMENT

New Mountain Finance and the Operating Company have also entered into a royalty-free license agreement with New Mountain, pursuant to which New Mountain has agreed to grant New Mountain Finance and the Operating Company a non-exclusive, royalty-free license to use the name "New Mountain". Under this agreement, subject to certain conditions, New Mountain Finance and the Operating Company will have a right to use the "New Mountain" name for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Operating Company. Other than with respect to this limited license, New Mountain Finance and the Operating Company will have no legal right to the "New Mountain" name.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Operating Company has entered into the Investment Management Agreement with the Investment Adviser. Pursuant to the Investment Management Agreement, payments will be equal to (a) a base management fee of 1.75% of the value of the Operating Company's gross assets and (b) an incentive fee based on the Operating Company's performance. Mr. Klinsky, through his financial interest in the Investment Adviser, is entitled to a portion of any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement. In addition, AIV Holdings', New Mountain Finance's and the Operating Company's executive officers and directors, as well as the current or future members of the Investment Adviser, serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Operating Company does or of investment funds managed by AIV Holdings and the Operating Company's affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of the Operating Company, New Mountain Finance, AIV Holdings or Guardian AIV. Although the Operating Company will currently be New Mountain's only vehicle focused primarily on investing in the Target Securities, in the future, the principals of the Investment Adviser and/or New Mountain employees that provide services pursuant to the Investment Management Agreement may manage other funds which may from time to time have overlapping investment objectives with our own and, accordingly, may invest in, whether principally or secondarily, asset classes similar to those targeted by the Operating Company. If this occurs, the Investment Adviser may face conflicts of interest in allocating investment opportunities to the Operating Company and such other funds. Although the investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that the Operating Company may not be given the opportunity to participate in certain investments made by investment funds managed by the Investment Adviser or persons affiliated with the Investment Adviser or that certain of these investment funds may be favored over the Operating Company. When these investment professionals identify an investment, they will be forced to choose which investment fund should make the investment. See "Risk Factors — Risks Relating to Our Business — The Investment Adviser has significant potential conflicts of interest with AIV Holdings and the Operating Company and, consequently, Guardian AIV's interests as the sole stockholder of AIV Holdings, which could adversely impact our investment returns" and "Investment Management Agreement".

Pursuant to the Administration Agreement, the Administrator will furnish New Mountain Finance and the Operating Company with the facilities and administrative services necessary to conduct their respective day-to-day operations, including equipment, clerical, bookkeeping and recordkeeping services at such facilities. In addition, the Administrator will assist New Mountain Finance and the Operating Company in connection with the determination and publishing of their respective net asset values, the preparation and filing of tax returns and the printing and dissemination of reports to New Mountain Finance's stockholders. The Operating Company will reimburse the Administrator for New Mountain Finance's and the Operating Company's allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including a portion of the rent and the compensation of New Mountain Finance's and the Operating Company's chief financial officer and chief compliance officer, and their respective staffs. See "Administration Agreement". Each of these contracts may be terminated by New Mountain Finance, the Operating Company or the Administrator without penalty upon 60 days' written notice to the other.

The Operating Company has also entered into a license agreement with New Mountain, pursuant to which New Mountain has agreed to grant New Mountain Finance and the Operating

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Company a non-exclusive, royalty-free license to use the name New Mountain. Under this agreement, subject to certain conditions, New Mountain Finance and the Operating Company will have a right to use the New Mountain name, for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Operating Company. Other than with respect to this limited license, New Mountain Finance and the Operating Company will have no legal right to the New Mountain name.

AIV Holdings and the Operating Company will also enter into various agreements with New Mountain and its affiliates in connection with the formation transactions described in this document and the initial public offering. See "Formation Transactions and Related Agreements" for a description of these agreements, including a description of the LLC Agreement.

Concurrently with the closing of the initial public offering, New Mountain Finance will sell 2,059,655 shares of its common stock to certain executives and employees of, and other individuals affiliated with, New Mountain in a separate private placement at the initial public offering price per share.

New Mountain Finance and the Operating Company have also entered into indemnification agreements with their directors. See "Management — Indemnification Agreements." Guardian AIV has entered into an agreement to indemnify the Operating Company and SLF and their officers, managers, employees and agents from liabilities that may arise out of Guardian AIV's failure to pay taxes incurred by Guardian AIV prior to the formation transactions.

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CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

The following tables set forth information with respect to the beneficial ownership of AIV Holdings' common stock, giving effect to the completion of the formation transactions referred to in "Formation Transactions and Related Agreements — Holding Company Structure", by:

•: each person known to AIV Holdings to beneficially own 5% or more of the outstanding shares of AIV Holdings' common stock;
•: each of AIV Holdings' directors and each executive officer individually; and
•: all of AIV Holdings' directors and executive officers as a group.

Beneficial ownership of securities is determined in accordance with the rules of the SEC and includes voting or investment power (including the power to dispose) with respect to the securities. Percentage of beneficial ownership below takes into account 100 shares of common stock of AIV Holdings outstanding upon the completion of the formation transactions. Unless otherwise indicated, the address for each listed stockholder is c/o New Mountain Finance AIV Holdings Corporation, 787 7th Avenue, 48th Floor, New York, NY 10019.

		AIV Holdings

		Shares Beneficially Owned Immediately After the Formation Transactions
	Type of Ownership in AIV Holdings
Name	Type of Ownership in AIV Holdings	Number		Percentage
Beneficial Owners of More than 5%:
New Mountain Guardian AIV, L.P.(1)	Direct		100		100	%
California Public Employees' Retirement System(2)(3)	Beneficial		7.3		7.3	%
Pennsylvania Public School Employees' Retirement System(2)(3)	Beneficial		5.5		5.5	%
Executive Officers:
Adam Weinstein	N/A		0		*
Paula Bosco	N/A		0		*
Interested Directors:
Steven Klinsky(1)	Beneficial		100		100	%
Robert Hamwee	N/A		0		*
Independent Directors:
David Ogens	N/A		0		*
Albert F. Hurley, Jr.	N/A		0		*
Kurt J. Wolfgruber	N/A		0		*
All officers and directors as a group (7 persons)(1)	Beneficial		100		100	%

*: Represents less than 1%.
(1): The general partner of Guardian AIV is New Mountain Investments III, L.L.C. Steven B. Klinsky is the managing member of the general partner. The general partner has decision making power over the disposition of the holdings of their respective funds. New Mountain Investments III, L.L.C., as the general partner of Guardian AIV, has voting power over Guardian AIV's stock in AIV Holdings. Mr. Klinsky, as the managing member of the general partner has decision making power over the disposition of the holdings of Guardian AIV and has voting power with respect to the holdings of Guardian AIV as to which its general partner has voting power on a pass through basis. Mr. Klinsky may be deemed to beneficially own the direct or indirect holdings of Guardian AIV. Mr. Klinsky and New Mountain Investments III, L.L.C. expressly disclaim beneficial ownership of the above shares of AIV Holdings.

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(2): The address of the California Public Employees' Retirement System (CalPERS) is Lincoln Plaza North, 400 Q Street, Sacramento, CA 95811. The address of the Pennsylvania Public School Employees' Retirement System (PSERS) is 5 North Fifth Street, 4th Floor, Harrisonburg, PA 17101. The calculation of CalPERS' and PSERS' respective beneficial ownership is based on their ownership interests in Guardian AIV as of March 31, 2011, which is the most recent beneficial ownership information reasonably available to us. A calculation within 30 days of this offering is not reasonably available to us due to unreasonable effort or expense.
(3): CalPERS and PSERS will have certain pass through voting rights in AIV Holdings, as a result of which they will have beneficial ownership of AIV Holdings shares. Their beneficial ownership in AIV Holdings has been rounded to the nearest tenth of a share.

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DETERMINATION OF NET ASSET VALUE

Quarterly Net Asset Value Determinations

Operating Company

The Operating Company conducts the valuation of our assets, pursuant to which its net asset value shall be determined, at all times consistent with GAAP and the 1940 Act. The net asset value per unit of common membership units of the Operating Company will be determined on a quarterly basis. The net asset value per unit is equal to the value of the Operating Company's total assets minus liabilities and any preferred membership units outstanding divided by the total number of the Operating Company's common membership units outstanding.

Value, as defined in Section 2(a)(41) of the 1940 Act, is (i) the market price for those securities for which a market quotation is readily available and (ii) for all other securities and assets, fair value as is determined in good faith by the board of directors. Investments for which market quotations are readily available on an exchange are valued at such market quotations. Indicative prices with respect to certain of the Operating Company's investments from pricing services or brokers or dealers may be obtained in order to value these investments. When doing so, the Investment Adviser determines whether the quote obtained is sufficient to determine the fair value of the investment. If determined adequate, the Operating Company uses the quote obtained.

The Operating Company will value investments for which it does not have readily available market quotations at fair value as determined in good faith by its board of directors. The Operating Company expects to value these investments at fair value as determined in good faith by its board of directors using a documented valuation policy and consistently applied valuation process. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies".

The Operating Company's board of directors undertakes a multi-step valuation process each quarter, as described below:

•: The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
•: Preliminary valuation conclusions are then documented and discussed with the Operating Company's senior management;
•: At least once annually, the valuation for each portfolio investment for which the Operating Company does not have a readily available market quotation for four consecutive quarters will be reviewed by an independent valuation firm engaged by the Operating Company's board of directors subject to a materiality threshold;
•: The valuation committee of the Operating Company's board of directors reviews the valuations and the report of the independent valuation firm, confirms that valuations are made in accordance with the valuation policies and reports any deficiencies or violations of the valuation policies to the board of directors on at least a quarterly basis; and
•: The Operating Company's board of directors will discuss the valuations and determine the fair value of each investment in its portfolio in good faith.

The Operating Company's board of directors has engaged an independent third party valuation firm to provide it with valuation assistance with respect to our material unquoted assets, and, at least once annually if a materiality threshold is met, the valuation for portfolio investments for which it does not have a readily available market quotation for four consecutive quarters will be reviewed by such firm. Upon completion of its process, the independent valuation firm provides the Operating Company with a written report regarding the preliminary valuations of these securities.

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The Operating Company will continue to engage an independent valuation firm to provide it with assistance regarding its determination of the fair value of our material unquoted assets; however, the Operating Company's board of directors is ultimately and solely responsible for determining the fair value of its investments in good faith.

Due to the inherent uncertainty in the valuation process, the Operating Company's estimate of fair value may differ materially from the values that would have been used had a ready market for the securities existed. In addition, changes in the market environment and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned. The Operating Company determines the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

Determination of fair values involves subjective judgments and estimates. The notes to the Operating Company's financial statements will refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on its financial statements. The Operating Company's valuation policy, including with respect to the use of independent valuation firms, may change over time as determined by its board of directors.

AIV Holdings

Because AIV Holdings will be a holding company and immediately following the completion of the initial public offering its only business and sole asset will be its ownership of common membership units of the Operating Company, the value of its interest in the Operating Company will depend on the Operating Company's valuation of its investments. AIV Holdings will conduct the valuation of its ownership in the Operating Company, pursuant to which its net asset value shall be determined, at all times consistent with GAAP and the 1940 Act. The net asset value per share of AIV Holdings' common stock will be determined on a quarterly basis and is equal to AIV Holdings' pro rata share, based on the number of common membership units of the Operating Company held by AIV Holdings at the time of the net asset value determination, of the Operating Company's net asset value divided by the total number of shares of AIV Holdings' common stock outstanding. AIV Holdings' board of directors will have no control over the determinations of fair value by the Operating Company's board of directors, although the Operating Company's initial board of directors will be the same as AIV Holdings' initial board of directors. As a result, the value of an investment in shares of AIV Holdings' common stock may be understated or overstated based on the Operating Company's fair value determinations. In the event that AIV Holdings' board of directors believes that a different fair value for the Operating Company's investments is appropriate, AIV Holdings' board of directors will endeavor to discuss the differences in the valuations with the Operating Company's board of directors for the purposes of resolving the differences in valuation. The valuation procedures of AIV Holdings will be substantially similar to those utilized by the Operating Company described above.

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Determinations in Connection with Offerings of New Mountain Finance

New Mountain Finance may access the capital markets periodically to issue equity securities, which would in turn increase the equity capital available to the Operating Company. In connection with future offering of shares of New Mountain Finance's common stock, New Mountain Finance's board of directors or a committee thereof will be required to make the determination that it is not selling shares of New Mountain Finance's common stock at a price below the then current net asset value of New Mountain Finance's common stock at the time at which the sale is made. New Mountain Finance's board of directors will consider the following factors, among others, in making such determination:

•: the net asset value per share of New Mountain Finance's common stock disclosed in the most recent periodic report that New Mountain Finance has filed with the SEC;
•: New Mountain Finance's management's assessment of whether any material change in the net asset value per share of its common stock has occurred (including through the realization of gains on the sale of the Operating Company's portfolio securities) during the period beginning on the date of the most recently disclosed net asset value per share of New Mountain Finance's common stock and ending two days prior to the date of the sale of New Mountain Finance's common stock; and
•: the magnitude of the difference between (i) the net asset value per share of New Mountain Finance's common stock disclosed in the most recent periodic report that New Mountain Finance has filed with the SEC and New Mountain Finance management's assessment of any material change in the net asset value per share of New Mountain Finance's common stock since the date of the most recently disclosed net asset value per share of New Mountain Finance's common stock and (ii) the offering price of the shares of New Mountain Finance's common stock in the proposed offering.

Importantly, this determination will not require that New Mountain Finance calculate the net asset value per share of its common stock in connection with each offering of shares of its common stock, but instead it will involve the determination by its board of directors or a committee thereof that it is not selling shares of New Mountain Finance's common stock at a price per share below the then current net asset value per share of New Mountain Finance's common stock at the time at which the sale is made.

Moreover, to the extent that there is even a remote possibility that New Mountain Finance may (i) issue shares of its common stock at a price per share below the then current net asset value per share of its common stock at the time at which the sale is made or (ii) trigger the undertaking (which New Mountain Finance will provide in certain registration statements it files with the SEC) to suspend the offering of shares of its common stock pursuant to the prospectus related to the initial public offering if the net asset value per share of New Mountain Finance's common stock fluctuates by certain amounts in certain circumstances until the prospectus is amended, New Mountain Finance's board of directors will elect, in the case of clause (i) above, either to postpone the offering until such time that there is no longer the possibility of the occurrence of such event or to undertake to determine the net asset value per share of its common stock within two days prior to any such sale to ensure that such sale will not be below its then current net asset value per share, and, in the case of clause (ii) above, to comply with such undertaking or to undertake to determine the net asset value per share of its common stock to ensure that such undertaking has not been triggered.

These processes and procedures are part of New Mountain Finance's compliance policies and procedures. Records will be made contemporaneously with all determinations described in this section and these records will be maintained with other records that New Mountain Finance and the Operating Company are required to maintain under the 1940 Act.

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DESCRIPTION OF AIV HOLDINGS' CAPITAL STOCK

The following description is based on relevant portions of the Delaware General Corporation Law, AIV Holdings' certificate of incorporation and amended and restated bylaws. This summary is not necessarily complete, and we refer you to the Delaware General Corporation Law, AIV Holdings' certificate of incorporation and bylaws for a more detailed description of the provisions summarized below.

Capital Stock

AIV Holdings' authorized capital stock shall consist of 900,000 shares of common stock, par value $0.01 per share, of which, immediately after the formation transactions, 100 shares will be outstanding, and 100,000 shares of preferred stock, par value $0.01, of which no shares are currently outstanding. There is currently no market for AIV Holdings' common stock.

Common Stock

Under the terms of AIV Holdings' certificate of incorporation, all shares of AIV Holdings' common stock will have equal rights as to earnings, assets, dividends and voting and have been duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of AIV Holdings' common stock if, as and when authorized by AIV Holdings' board of directors and declared by AIV Holdings out of funds legally available therefore. Shares of AIV Holdings' common stock will have no preemptive, exchange, conversion or redemption rights and will be freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. In the event of AIV Holdings' liquidation, dissolution or winding up, each share of its common stock would be entitled to share ratably in all of its assets that are legally available for distribution after it pays all debts and other liabilities and subject to any preferential rights of holders of its preferred stock, if any preferred stock is outstanding at such time. Each share of AIV Holdings' common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of AIV Holdings' common stock will possess exclusive voting power. There will be no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock will be able to elect all of AIV Holdings' directors (other than directors to be elected solely by the holders of preferred stock), and holders of less than a majority of such shares will be unable to elect any director.

Preferred Stock

AIV Holdings' certificate of incorporation authorizes its board of directors to issue preferred stock. Prior to the issuance of shares of each class or series, the board of directors is required by Delaware law and by AIV Holdings' certificate of incorporation to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of AIV Holdings' common stock or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must comply with the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any dividend or other distribution is made with respect to AIV Holdings' common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of the Operating Company's total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are

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issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends on such preferred stock are in arrears by two full years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a business development company. However, AIV Holdings does not currently have any plans to issue preferred stock.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

The Delaware General Corporation Law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties. AIV Holdings certificate of incorporation will include a provision that eliminates the personal liability of its directors for monetary damages for actions taken as a director, except for liability:

•: for breach of duty of loyalty;
•: for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law;
•: under Section 174 of the DGCL (unlawful dividends); or
•: for transactions from which the director derived improper personal benefit.

Under AIV Holdings' bylaws, AIV Holdings will fully indemnify any person who was or is involved in any actual or threatened action, suit or proceeding by reason of the fact that such person is or was one of AIV Holdings' directors or officers. So long as AIV Holdings is regulated under the 1940 Act, the above indemnification and limitation of liability is limited by the 1940 Act or by any valid rule, regulation or order of the SEC thereunder. The 1940 Act provides, among other things, that a company may not indemnify any director or officer against liability to it or its security holders to which he or she might otherwise be subject by reason of his or her willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office unless a determination is made by final decision of a court, by vote of a majority of a quorum of directors who are disinterested, non-party directors or by independent legal counsel that the liability for which indemnification is sought did not arise out of the foregoing conduct.

Delaware law also provides that indemnification permitted under the law shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation's bylaws, any agreement, a vote of stockholders or otherwise.

AIV Holdings has obtained liability insurance for its officers and directors.

Delaware Law and Certain Certificate of Incorporation and Bylaw Provisions;
Anti-Takeover Measures

Certain provisions of AIV Holdings certificate of incorporation and bylaws, as summarized below, and applicable provisions of the Delaware General Corporation Law and certain other agreements to which AIV Holdings is a party may make it more difficult for or prevent an unsolicited third party from acquiring control of AIV Holdings or changing its board of directors and management. These provisions may have the effect of deterring hostile takeovers or delaying changes in AIV Holdings' control or in its management. These provisions are intended to enhance the likelihood of continued stability in the composition of AIV Holdings' board of directors and in the policies furnished by them and to discourage certain types of transactions that may involve an actual or threatened change in AIV Holdings' control.

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Classified Board; Vacancies; Removal. The classification of AIV Holdings board of directors and the limitations on removal of directors and filling of vacancies could have the effect of making it more difficult for a third party to acquire AIV Holdings, or of discouraging a third party from acquiring AIV Holdings. AIV Holdings' board of directors will be divided into three classes, with the term of one class expiring at each annual meeting of stockholders. At each annual meeting, one class of directors is elected to a three-year term. This provision could delay for up to two years the replacement of a majority of the board of directors.

AIV Holdings' certificate of incorporation provides that, subject to the rights of any holders of preferred stock, any vacancy on the board of directors, however the vacancy occurs, including a vacancy due to an enlargement of the board, may only be filled by vote a majority of the directors then in office.

A director may be removed at any time at a meeting called for that purpose, but only for cause and only by the affirmative vote of the holders of at least 75% of the shares then entitled to vote for the election of the respective director.

Advance Notice Requirements for Stockholder Proposals and Director Nominations. AIV Holdings' bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the board of directors and the proposal of business to be considered by stockholders may be made only (1) by or at the direction of the board of directors or (2) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the bylaws. Nominations of persons for election to the board of directors at a special meeting may be made only (1) by or at the direction of the board of directors or (2) provided that the board of directors has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws. The purpose of requiring stockholders to give AIV Holdings advance notice of nominations and other business is to afford AIV Holdings' board of directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by AIV Holdings' board of directors, to inform its stockholders and make recommendations about such qualifications or business, as well as to approve a more orderly procedure for conducting meetings of stockholders. Although AIV Holdings' bylaws do not give its board of directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial AIV Holdings.

Amendments to Certificate of Incorporation and Bylaws. Delaware's corporation law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or bylaws, unless a corporation's certificate of incorporation or bylaws requires a greater percentage. AIV Holdings certificate of incorporation will provide that the following provisions, among others, may be amended by its stockholders only by a vote of at least two-thirds of the shares of AIV Holdings capital stock entitled to vote:

•: the classification of its board of directors;
•: the removal of directors;
•: the limitation on shareholder action by written consent;

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•: the limitation of directors' personal liability to AIV Holdings or its shareholders for breach of fiduciary duty as a director;
•: the ability to call a Special Meeting of Shareholders being vested in AIV Holdings' board of directors, the Chairperson of its board, AIV Holdings' Chief Executive Officer and in the holders of at least fifty (50) percent of the voting power of all shares of capital stock of AIV Holdings generally entitled to vote on the election of directors then outstanding subject to certain procedures; and
•: the amendment provision requiring that the above provisions be amended only with a two-thirds supermajority vote.

The bylaws generally can be amended by approval of (i) a majority of the total number of authorized directors or (ii) the affirmative vote of the holders of at least two-thirds of the shares of AIV Holdings' capital stock entitled to vote.

Calling of Special Meetings by Stockholders. AIV Holdings' certificate of incorporation and bylaws also provide that special meetings of the stockholders may only be called by AIV Holdings' board of directors, the Chairperson of its board, AIV Holdings' Chief Executive Officer or upon the request of the holders of at least fifty (50) percent of the voting power of all shares of capital stock of AIV Holdings, generally entitled to vote on the election of directors then outstanding, subject to certain limitations.

Section 203 of the Delaware General Corporation Law. AIV Holdings will not be subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the "business combination" or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation's voting stock. In our certificate of incorporation, we have elected not to be bound by Section 203.

The Credit Facility also includes change of control provisions that accelerate the indebtedness under the facility in the event of certain change of control events. If certain transactions were engaged in without the consent of the lender, repayment obligations under the Credit Facility could be accelerated.

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REGULATION

New Mountain Finance, AIV Holdings and the Operating Company intend to elect to be treated as business development companies under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to investments by a business development company in another investment company and transactions between business development companies and their affiliates, principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act requires that a majority of the directors be persons other than "interested persons", as that term is defined in the 1940 Act. In addition, the 1940 Act provides that New Mountain Finance, AIV Holdings and the Operating Company may not change the nature of their respective businesses so as to cease to be, or to withdraw their respective elections as, business development companies unless approved by a majority of their respective outstanding voting securities. The 1940 Act defines "a majority of the outstanding voting securities" as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) 50% of our voting securities.

AIV Holdings is relying on the provisions of Section 12(d)(1)(E) of the 1940 Act, which requires, among other things, that its investment in the Operating Company be its only asset and that its shareholders are entitled to vote on a "pass-through" basis with the Operating Company's other voting security holders. Under the 1940 Act, Guardian AIV will likewise have pass through voting rights with respect to the election of the Operating Company's directors and other matters requiring a vote of the Operating Company's security holders.

As a business development company, the Operating Company will not generally be permitted to invest in any portfolio company in which the Investment Adviser or any of its affiliates currently have an investment or to make any co-investments with the Investment Adviser or its affiliates without an exemptive order from the SEC.

In addition, as business development companies, New Mountain Finance, AIV Holdings and the Operating Company are not permitted to issue stock or membership units in consideration for services. New Mountain Finance and the Operating Company intend to seek exemptive relief to permit the Operating Company to pay 50% of the incentive fee payable to the Investment Adviser in common membership units of the Operating Company which will be exchangeable into shares of New Mountain Finance's common stock and to treat the receipt of such common membership units as an exempt purchase under Section 16 of the Exchange Act. There can be no assurance that the exemptive relief requested will be granted.

Qualifying Assets

Under the 1940 Act, a business development company may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company's total assets. Because AIV Holdings immediately following the completion of the initial public offering will have no assets other than its ownership of common membership units of the Operating Company and will have no material long-term liabilities, AIV Holdings will look to the Operating Company's assets for purposes of satisfying these requirements. The principal categories of qualifying assets relevant to our business are any of the following:

(1): Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to

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such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:

(a)

is organized under the laws of, and has its principal place of business in, the United States;

(b)

is not an investment company (other than a small business investment company wholly owned by the business development company) or a company that would be an investment company but for certain exclusions under the 1940 Act; and

(c)

satisfies any of the following:

(i): does not have any class of securities that is traded on a national securities exchange;
(ii): has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;
(iii): is controlled by a business development company or a group of companies including a business development company and the business development company has an affiliated person who is a director of the eligible portfolio company; or
(iv): is a small and solvent company having total assets of not more than $4 million and capital and surplus of not less than $2 million.

(2): Securities of any eligible portfolio company that we control.
(3): Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.
(4): Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and the Operating Company already owns 60% of the outstanding equity of the eligible portfolio company.
(5): Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
(6): Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.

In addition, a business development company must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above.

Managerial Assistance to Portfolio Companies

In order to count portfolio securities as qualifying assets for the purpose of the 70% test, the Operating Company must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance, except that, where the Operating Company purchases such securities in conjunction with one or more other persons acting together, one of the other persons in the group

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may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the business development company offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company. The Administrator or its affiliate will provide such managerial assistance on the Operating Company's behalf to portfolio companies that request this assistance.

Temporary Investments

Pending investment in other types of "qualifying assets", as described above, the Operating Company's investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as "temporary investments", so that 70% of the Operating Company's assets are qualifying assets. Typically, the Operating Company will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price that is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of the Operating Company's assets that may be invested in such repurchase agreements. However, if more than 25% of the Operating Company's total assets constitute repurchase agreements from a single counterparty, AIV Holdings would not meet the Diversification Tests in order to qualify as a RIC for federal income tax purposes. Thus, the Operating Company does not intend to enter into repurchase agreements with a single counterparty in excess of this limit. The Investment Adviser will monitor the creditworthiness of the counterparties with which the Operating Company enters into repurchase agreement transactions.

Senior Securities

The Operating Company is permitted, under specified conditions, to issue multiple classes of debt and one class of membership units senior to its common membership units if the Operating Company's asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, while any senior securities remain outstanding (other than any indebtedness issued in consideration of a privately arranged loan, such as any indebtedness outstanding under the Credit Facility or SLF Credit Facility), AIV Holdings and the Operating Company must make provisions to prohibit any distribution to their stockholders or members, as applicable, or the repurchase of their equity securities unless the Operating Company meets the applicable asset coverage ratios at the time of the distribution or repurchase. The Operating Company may also borrow amounts up to 5% of the value of its total assets for temporary or emergency purposes without regard to its asset coverage. The Operating Company will include the assets and liabilities of SLF for purposes of calculating the asset coverage ratio. For a discussion of the risks associated with leverage, see "Risk Factors — Risks Relating to Our Business — Regulations governing the operations of business development companies will affect New Mountain Finance's ability to raise additional equity capital as well as the Operating Company's ability to issue senior securities or borrow for investment purposes, any or all of which could have a negative effect on the Operating Company's investment objectives and strategies" and "— The Operating Company will borrow money, which could magnify the potential for gain or loss on amounts invested in us and increase the risk of investing in us".

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Code of Ethics

AIV Holdings and the Operating Company have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in securities for their personal investment accounts, including securities that may be purchased or held by AIV Holdings or the Operating Company so long as such investments are made in accordance with the code's requirements. We have attached this code of ethics as an exhibit to the Form 10. You may also read and copy the code of ethics at the SEC's Public Reference Room located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-202-942-8090, and copies of the code of ethics may be obtained, after paying a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov. In addition, the code of ethics is available on the SEC's Internet site athttp://www.sec.gov.

Compliance Policies and Procedures

AIV Holdings, the Operating Company and the Investment Adviser have adopted and implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws and AIV Holdings and the Operating Company are required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation. AIV Holdings' and the Operating Company's chief compliance officer is responsible for administering these policies and procedures.

Proxy Voting Policies and Procedures

The Operating Company has delegated its proxy voting responsibility to the Investment Adviser. The proxy voting policies and procedures of the Investment Adviser are set forth below. (The guidelines will be reviewed periodically by the Investment Adviser and the Operating Company's non-interested directors, and, accordingly, are subject to change).

Introduction

As an investment adviser registered under the Advisers Act, the Investment Adviser has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, it recognizes that it must vote client securities in a timely manner free of conflicts of interest and in the best interests of its clients.

The policies and procedures for voting proxies for the investment advisory clients of the Investment Adviser are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Proxy policies

The Investment Adviser will vote proxies relating to our securities in the best interest of the Operating Company. It will review on a case-by-case basis each proposal submitted for a stockholder vote to determine its impact on the portfolio securities held by the Operating Company. Although the Investment Adviser will generally vote against proposals that may have a negative impact on its clients' portfolio securities, it may vote for such a proposal if there exists compelling long-term reasons to do so.

The proxy voting decisions of the Investment Adviser are made by the senior officers who are responsible for monitoring each of its clients' investments. To ensure that its vote is not the product of a conflict of interest, it will require that: (a) anyone involved in the decision making process

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disclose to its chief compliance officer any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (b) employees involved in the decision making process or vote administration are prohibited from revealing how the Investment Adviser intends to vote on a proposal in order to reduce any attempted influence from interested parties.

Proxy voting records

You may obtain, without charge, information regarding how the Operating Company voted proxies with respect to its portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 787 7th Avenue, 48th Floor, New York, NY 10019.

Other

AIV Holdings and the Operating Company will be periodically examined by the SEC for compliance with the 1940 Act.

AIV Holdings and the Operating Company are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as business development companies, AIV Holdings and the Operating Company will be prohibited from protecting any director or officer against any liability to AIV Holdings, or their respective stockholders, or the Operating Company or its members, arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

Securities Exchange Act and Sarbanes-Oxley Act Compliance

Upon the closing of the initial public offering, New Mountain Finance, AIV Holdings and the Operating Company will be subject to the reporting and disclosure requirements of the Exchange Act, including the filing of quarterly, annual and current reports, proxy statements and other required items, unless and until the Operating Company obtains exemptive relief from the SEC. New Mountain Finance, AIV Holdings and the Operating Company expect to file an application with the SEC requesting an order exempting the Operating Company and AIV Holdings from certain reporting requirements mandated by the Exchange Act. In addition, New Mountain Finance, AIV Holdings and the Operating Company are subject to the Sarbanes-Oxley Act, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements will affect New Mountain Finance, AIV Holdings and the Operating Company. For example:

•: pursuant to Rule 13a-14 of the Exchange Act, the chief executive officer and chief financial officer of New Mountain Finance, AIV Holdings and the Operating Company will be required to certify the accuracy of the financial statements contained in their respective periodic reports;
•: pursuant to Item 307 of Regulation S-K, New Mountain Finance's, AIV Holdings' and the Operating Company's periodic reports will be required to disclose their respective conclusions about the effectiveness of their disclosure controls and procedures;
•: pursuant to Rule 13a-15 of the Exchange Act, beginning for the fiscal year ending December 31, 2012, New Mountain Finance's, AIV Holdings' and the Operating Company's management will be required to prepare a report regarding their assessment of their respective internal control over financial reporting and will be required to obtain an audit of the effectiveness of internal control over financial reporting performed by their independent registered public accounting firm as of December 31, 2012; and

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•: pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, New Mountain Finance's, AIV Holdings' and the Operating Company's periodic reports will be required to disclose whether there were significant changes in their respective internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

The Sarbanes-Oxley Act requires AIV Holdings and the Operating Company to review their current policies and procedures to determine whether they comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. AIV Holdings and the Operating Company intend to monitor their compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that they are in compliance therewith.

Fundamental Investment Policies

Neither the Operating Company's or AIV Holdings' investment objective nor the Operating Company's or AIV Holdings' investment policies are identified as fundamental. Accordingly, the Operating Company's investment objective and policies may be changed by the Operating Company without the approval of its members.

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SAFEKEEPING AGENT

The Operating Company maintains custody of its assets in accordance with the requirements of Rule 17f-2 under the 1940 Act. Also in accordance with this rule, the Operating Company's portfolio securities are held under a safekeeping agreement, by Wells Fargo Securities, N.A., which is a bank whose functions and physical facilities are supervised by federal or state authority. The address of the safekeeping agent is: 9062 Old Annapolis Road, Columbia, Maryland 21045. An independent public accountant selected by the Operating Company will verify by actual examination the assets of the Operating Company held at Wells Fargo Securities, N.A. three times per year, two of which examinations will be conducted without prior notice to the Operating Company. The accountant will prepare a certificate stating that an examination has been made and will send this certificate, along with a Form N-17f-2, to the SEC promptly after each examination.

BROKERAGE ALLOCATION AND OTHER PRACTICES

Since the Operating Company intends to generally acquire and dispose of its investments in privately negotiated transactions, we expect that it will infrequently use brokers in the normal course of its business. Subject to policies established by the Operating Company's board of directors, the Investment Adviser is primarily responsible for the execution of the publicly-traded securities portion of the Operating Company's portfolio transactions and the allocation of brokerage commissions. The Investment Adviser does not execute transactions through any particular broker or dealer, but seeks to obtain the best net results, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm's risk and skill in positioning blocks of securities. While the Investment Adviser will generally seek reasonably competitive trade execution costs, the Operating Company will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, the Investment Adviser may select a broker based partly upon brokerage or research services provided to the Investment Adviser and the Operating Company and any other clients. In return for such services, the Operating Company may pay a higher commission than other brokers would charge if the Investment Adviser determines in good faith that such commission is reasonable in relation to the services provided.

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INDEX TO FINANCIAL STATEMENTS

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INTERIM COMBINED FINANCIAL STATEMENTS OF NEW MOUNTAIN GUARDIAN (LEVERAGED), L.L.C. and NEW MOUNTAIN GUARDIAN PARTNERS, L.P.:
Combined Statements of Assets, Liabilities and Capital as of March 31, 2011 and December 31, 2010		F-2
Combined Schedule of Investments as of March 31, 2011		F-3
Combined Schedule of Investments as of December 31, 2010		F-5
Combined Statements of Operations for the three months ended March 31, 2011 and 2010		F-7
Combined Statements of Changes in Capital for the three months ended March 31, 2011 and year ended December 31, 2010		F-8
Combined Statements of Cash Flows for the three months ended March 31, 2011 and 2010		F-9
Notes to the Combined Financial Statements		F-10
AUDITED COMBINED FINANCIAL STATEMENTS OF NEW MOUNTAIN GUARDIAN (LEVERAGED), L.L.C. and NEW MOUNTAIN GUARDIAN PARTNERS, L.P.:
	Report of Independent Registered Public Accounting Firm	F-23
	Combined Statements of Assets, Liabilities and Capital as of December 31, 2010 and December 31, 2009	F-24
	Combined Schedule of Investments as of December 31, 2010	F-25
	Combined Schedule of Investments as of December 31, 2009	F-27
	Combined Statements of Operations for the years ended December 31, 2010 and 2009 and the period from October 29, 2008 (commencement of operations) to December 31, 2008	F-29
	Combined Statements of Changes in Capital for years ended December 31, 2010 and 2009 and the period from October 29, 2008 (commencement of operations) to December 31, 2008	F-30
	Combined Statements of Cash Flows for years ended December 31, 2010 and 2009 and the period from October 29, 2008 (commencement of operations) to December 31, 2008	F-31
	Notes to the Combined Financial Statements	F-32

F-1

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Assets, Liabilities and Capital

		March 31, 2011		December 31, 2010

		(unaudited)
Assets
	Investments, at fair value (cost $432,174,239 and $414,308,823 respectively)	$	460,020,593	$	441,057,840
	Cash and cash equivalents		27,198,421		10,744,082
	Deferred offering costs		5,072,610		3,528,110
	Interest receivable		4,801,469		3,007,787
	Deferred credit facility costs (net of accumulated amortization of $207,533 and $69,909 respectively)		2,599,017		1,880,120
	Other assets		3,034		5,842

	Total assets	$	499,695,144	$	460,223,781

Liabilities
	SLF credit facility		106,871,868		56,936,000
	Debt Funding credit facility		64,892,248		59,696,938
	Payable for unsettled securities purchased		27,560,000		94,462,500
	Other liabilities		5,526,069		3,856,571
	Payable to affiliates		3,500,135		2,531,319
	Interest payable		1,147,192		813,192

	Total liabilities		209,497,512		218,296,520
Capital			290,197,632		241,927,261

	Total liabilities and capital	$	499,695,144	$	460,223,781

The accompanying notes are an integral part of these combined financial statements.

F-2

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments (unaudited)
March 31, 2011

Portfolio Company, Location and Industry			Type of Investment	Interest Rate				Cost		Fair Value

United States
	Stratus Technologies, Inc.
		Information Technology	Ordinary shares	—	—	144,270		$	65,123	$	56,440
			Preferred shares	—	—	32,830			14,819		12,844

									79,942		69,284	0.02	%

Total shares									79,942		69,284	0.02	%

United States
	Alion Science and Technology Corporation
		Federal Services	Warrants(3)	—	—	6,000	��		292,851		306,066	0.11	%
	Learning Care Group (US), Inc.
		Education	Warrants	—	—	845			193,850		109,777	0.04	%

Total warrants									486,701		415,843	0.15	%

Canada
	Trident Exploration Corp.(2)
		Energy	First lien(3)	12.50% (Base Rate + 9.50%)	6/30/2014	3,368,689			3,283,321		3,570,810	1.23	%

Total Canada						3,368,689			3,283,321		3,570,810	1.23	%

United States
	Managed Health Care Associates, Inc.
		Healthcare Services	First lien(3)	3.50% (Base Rate + 3.25%)	8/1/2014	22,467,673			17,727,718		21,793,642
			Second lien(3)	6.75% (Base Rate + 6.50%)	2/1/2015	15,000,000			11,385,772		13,950,000

						37,467,673			29,113,490		35,743,642	12.31	%

	Attachmate Corporation, NetIQ Corporation
		Software	Second lien(3)	7.05% (Base Rate + 6.75%)	10/13/2013	22,500,000			17,463,378		22,415,625	7.72	%
	Learning Care Group (US), Inc.
		Education	First lien(3)	12.00%	4/27/2016	17,368,422			17,070,960		17,368,422
			Subordinated	15.00%	6/30/2016	2,832,237			2,619,023		2,699,506

						20,200,659			19,689,983		20,067,928	6.92	%

	Decision Resources, LLC
		Business Services	First lien(4)	7.00% (Base Rate + 5.50%)	12/28/2016	17,955,000			17,693,517		17,977,444	6.19	%
	KeyPoint Government Solutions, Inc.
		Federal Services	First lien(3)	10.00% (Base Rate + 8.00%)	12/31/2015	17,955,000			17,605,888		17,865,225	6.16	%
	Smile Brands Group Inc.
		Healthcare Services	First lien(4)	7.00% (Base Rate + 5.25%)	12/21/2017	17,456,250			17,200,596		17,499,890	6.03	%
	TravelCLICK, Inc.
		Information Services	First lien(4)	7.25% (Base Rate + 4.00%)	3/16/2016	16,500,000			16,171,811		16,417,500	5.66	%
	Airvana Network Solutions Inc.
		Software	First lien(3)	10.00% (Base Rate + 8.00%)	3/25/2015	16,000,000			15,680,404		16,015,008	5.52	%
	Brock Holdings III, Inc.
		Industrial Services	Second lien(3)	10.00% (Base Rate + 8.25%)	3/16/2018	15,000,000			14,701,347		15,525,000	5.35	%
	Volume Services America, Inc. (Centerplate)
		Consumer Services	First lien(3)	10.50% (Base Rate + 8.50%)	9/16/2016	14,925,000			14,504,149		15,018,281	5.18	%
	MLM Holdings, Inc.
		Software	First lien(4)	7.00% (Base Rate + 5.25%)	12/1/2016	14,925,000			14,709,998		14,962,313	5.16	%
	LANDesk Software, Inc
		Software	First lien(4)	7.00% (Base Rate + 5.23%)	3/28/2016	15,000,000			14,712,905		14,718,750	5.07	%
	SonicWALL, Inc.
		Software	First lien(4)	8.27% (Base Rate + 6.19%)	1/23/2016	4,034,274			4,053,305		4,069,575
			Second lien(3)	12.00% (Base Rate + 10.00%)	1/23/2017	10,000,000			9,719,877		10,150,000

						14,034,274			13,773,182		14,219,575	4.90	%

	Virtual Radiologic Corporation
		Healthcare Information Technology	First lien(4)	7.75% (Base Rate + 4.50%)	12/22/2016	13,965,000			13,760,733		13,930,087	4.80	%
	Asurion, LLC
		Business Services	First lien(4)	6.75% (Base Rate + 5.25%)	3/31/2015	12,967,500			12,486,892		13,155,062	4.53	%
	Fibertech Networks, LLC (f/k/a Firefox Merger Sub, LLC)
		Telecommunication	First lien(4)	6.75% (Base Rate + 5.00%)	11/30/2016	11,970,000			11,797,911		12,209,400	4.21	%
	Mailsouth, Inc
		Media	First lien(4)	6.75% (Base Rate + 4.99%)	12/14/2016	12,000,000			11,825,400		12,060,000	4.16	%
	Vision Solutions, Inc
		Software	Second lien(3)	9.50% (Base Rate + 8.00%)	7/23/2017	12,000,000			11,880,000		12,060,000	4.16	%
	Merge Healthcare Inc.
		Healthcare Services	First lien(3)	11.75%	5/1/2015	11,000,000			10,819,535		11,935,000	4.11	%
	Merrill Communications LLC
		Business Services	First lien(3)	7.50% (Base Rate + 5.50%)	12/22/2012	11,421,788			9,533,752		11,421,788	3.94	%
	PODS Holding Funding Corp.
		Consumer Services	Subordinated	16.64%	12/23/2015	11,664,000			10,178,634		10,311,372	3.55	%
	CHG Companies Inc.
		Healthcare Services	Second lien(3)	11.25% (Base Rate + 9.50%)	4/7/2017	10,000,000			9,809,051		10,225,000	3.52	%
	Vertafore, Inc.
		Software	Second lien(3)	9.75% (Base Rate + 8.25%)	10/29/2017	10,000,000			9,903,839		10,200,000	3.51	%

The accompanying notes are an integral part of these combined financial statements.

F-3

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments (unaudited) (Continued)
March 31, 2011

Portfolio Company, Location and Industry			Type of Investment	Interest Rate			Cost			Fair Value

	Sunquest Information Systems, Inc.
		Healthcare Services	Second lien(3)	9.75% (Base Rate + 8.50%)	6/16/2017	9,000,000	$	8,824,542		$	9,315,000		3.21	%
	Mach Gen, LLC
		Power Generation	Second lien	7.82% (Base Rate + 7.50%)	2/22/2015	11,372,446		8,908,119			9,129,787		3.15	%
	Hyland Software, Inc.
		Software	First lien(4)	5.75% (Base Rate + 4.25%)	12/19/2016	7,980,000		7,980,000			8,004,938		2.76	%
	SSI Investments II Limited
		Education	Subordinated(3)	11.13%	6/1/2018	7,000,000		7,062,748			7,875,000		2.71	%
	Wyle Services Corporation
		Federal Services	First lien(4)	7.75% (Base Rate + 5.75%)	3/25/2016	7,462,469		7,488,748			7,513,774		2.59	%
	Research Pharmaceutical Services, Inc.
		Healthcare Services	First lien(4)	6.75% (Base Rate + 5.25%)	2/18/2017	7,500,000		7,388,729			7,462,500		2.57	%
	Stratus Technologies, Inc.
		Information Technology	First lien	12.00%	3/29/2015	7,000,000		6,604,374			6,483,750		2.23	%
	Alion Science and Technology Corporation
		Federal Services	First lien(3)	12.00%	11/1/2014	6,073,149		5,416,986			6,235,100		2.15	%
	Ozburn-Hessey Holding Company LLC
		Logistics	Second lien	10.50% (Base Rate + 8.50%)	10/8/2016	6,000,000		5,878,626			6,090,000		2.10	%
	Bartlett Holdings, Inc.
		Industrial Services	First lien(4)	6.75% (Base Rate + 5.00%)	11/23/2016	5,985,000		5,927,710			6,022,406		2.08	%
	Focus Brands Inc.
		Franchises	First lien(4)	5.25% (Base Rate + 4.00%)	11/5/2016	5,905,511		5,905,511			5,983,021		2.06	%
	Datatel, Inc.
		Software	Second lien(3)	8.75% (Base Rate + 7.25%)	2/19/2018	5,000,000		4,975,190			5,075,000		1.75	%
	ATI Acquisition Company
		Education	First lien(3)	8.25% (Base Rate + 6.00%)	12/30/2014	4,443,750		4,300,532			4,177,125		1.44	%
	Physiotherapy Associates, Inc. / Benchmark Medical, Inc.
		Healthcare Facilities	First lien(3)	7.50% (Base Rate + 4.25%)	6/28/2013	3,815,006		3,113,900			3,819,775		1.32	%
	LVI Services, Inc.
		Industrial Services	First lien(3)	9.25% (Base Rate + 7.50%)	3/31/2014	5,152,246		4,493,357			3,606,572		1.24	%
	Brickman Group Holdings, Inc.
		Business Services	First lien(4)	7.25% (Base Rate + 5.50%)	10/14/2016	2,992,500		3,026,738			3,055,468		1.05	%
	Source Media Inc. and Accuity Inc.
		Business Services	First lien(4)	6.50% (Base Rate + 5.00%)	1/24/2017	1,986,207		1,966,845			2,006,069		0.69	%
	Education Management LLC
		Education	First lien(1)	—	6/1/2012	3,000,000		(1,215,000	)		(195,000	)	-0.07	%
	Kronos Incorporated
		Software	First lien(1)	—	6/11/2013	4,198,500		(629,775	)		(225,669	)	-0.08	%
	RGIS Services, LLC
		Business Services	First lien(1)	—	4/30/2013	5,000,000		(2,850,000	)		(268,850	)	-0.09	%
	Advantage Sales & Marketing Inc.
		Business Services	First lien(1)	—	12/17/2015	10,500,000		(1,260,000	)		(1,155,000	)	-0.40	%

Total United States						484,273,928		428,324,275			455,964,656		157.12	%

Total debt investments						487,642,617		431,607,596			459,535,466		158.35	%

Total investments							$	432,174,239		$	460,020,593		158.52	%

(1): Par Value amounts represent the undrawn portion of revolving credit facilities. Cost amounts represent the cash received at settlement date increased for paydowns at par minus the purchase price.
(2): The company is headquartered in Canada. The debt is issued in USD.
(3): The Debt Funding credit facility is collateralized by the indicated investments.
(4): The SLF credit facility is collateralized by the indicated investments.

The accompanying notes are an integral part of these combined financial statements.

F-4

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments
December 31, 2010

Portfolio Company, Location and Industry			Type of Investment	Interest Rate			Cost		Fair Value

United States
	Stratus Technologies, Inc.
		Information Technology	Ordinary shares	—	—	103,050	$	47,063	$	45,149
			Preferred shares	—	—	23,450		10,710		10,274

								57,773		55,423	0.02	%

Total shares								57,773		55,423	0.02	%

United States
	Alion Science and Technology Corporation
		Federal Services	Warrants(3)	—	—	6,000		292,851		283,698	0.12	%
	Learning Care Group (US), Inc.
		Education	Warrants	—	—	845		193,850		193,742	0.08	%

Total warrants								486,701		477,440	0.20	%

Canada
	Trident Exploration Corp.(2)
		Energy	First lien(3)	12.50% (Base Rate + 9.50%)	6/30/2014	4,477,500		4,357,151		4,746,150	1.96	%

Total Canada						4,477,500		4,357,151		4,746,150	1.96	%

United States
	Managed Health Care Associates, Inc.
		Healthcare Services	First lien(3)	3.52% (Base Rate + 3.25%)	8/1/2014	22,467,673		17,462,237		20,557,920
			Second lien(3)	6.77% (Base Rate + 6.50%)	2/1/2015	15,000,000		11,227,497		13,200,001

						37,467,673		28,689,734		33,757,921	13.96	%

	Attachmate Corporation, NetIQ Corporation
		Software	Second lien(3)	7.04% (Base Rate + 6.75%)	10/13/2013	22,500,000		17,121,571		22,275,000	9.21	%
	Learning Care Group (US), Inc.
		Education	First lien(3)	12.00%	4/27/2016	17,368,422		17,057,656		17,192,834
			Subordinated	15.00%	6/30/2016	2,832,237		2,610,113		2,630,413

						20,200,659		19,667,769		19,823,247	8.19	%

	Decision Resources, LLC
		Business Services	First lien(4)	7.75% (Base Rate + 4.50%)	12/28/2016	18,000,000		17,730,000		17,820,001	7.37	%
	KeyPoint Government Solutions, Inc
		Federal Services	First lien(3)	10.00% (Base Rate + 8.00%)	12/31/2015	18,000,000		17,640,000		17,730,000	7.33	%
	Smile Brands Group, Inc.
		Healthcare Services	First lien(4)	7.50% (Base Rate + 4.25%)	12/21/2017	17,500,000		17,237,500		17,390,625	7.19	%
	Volume Services America, Inc. (Centerplate)
		Consumer Services	First lien(3)	10.50% (Base Rate + 8.50%)	9/16/2016	14,962,500		14,527,858		15,056,016	6.22	%
	MLM Holdings, Inc.
		Software	First lien(4)	7.00% (Base Rate + 5.25%)	12/1/2016	14,962,500		14,739,863		14,775,469	6.11	%
	LANDesk Software, Inc.
		Software	First lien(4)	7.00% (Base Rate + 5.25%)	3/28/2016	15,000,000		14,701,917		14,718,750	6.08	%
	SonicWALL, Inc.
		Software	First lien(4)	8.26% (Base Rate + 6.19%)	1/23/2016	4,485,887		4,507,797		4,519,531
			Second lien(3)	12.00% (Base Rate + 10.00%)	1/23/2017	10,000,000		9,712,391		10,050,000

						14,485,887		14,220,188		14,569,531	6.02	%

	Virtual Radiologic Corporation
		Healthcare Information Technology	First lien(4)	7.75% (Base Rate + 4.50%)	12/22/2016	14,000,000		13,790,000		13,965,000	5.77	%
	Asurion, LLC
		Business Services	First lien(4)	6.75% (Base Rate + 5.25%)	3/31/2015	13,000,000		12,494,497		13,052,234	5.40	%
	Aspen Dental Management, Inc.
		Healthcare Services	First lien(4)	7.72% (Base Rate + 6.00%)	10/6/2016	12,967,500	$	12,713,475	$	13,016,128	5.38	%
	Firefox Merger Sub, LLC (f/k/a Fibertech Networks, LLC)
		Telecommunication	First lien(4)	6.75% (Base Rate + 5.00%)	11/30/2016	12,000,000		11,821,633		12,240,000	5.06	%
	Airvana Network Solutions Inc.
		Software	First lien(3)	11.00% (Base Rate + 9.00%)	8/27/2014	11,833,333		11,611,357		11,890,039	4.91	%
	Mailsouth, Inc.
		Media	First lien(4)	7.00% (Base Rate + 3.75%)	12/14/2016	12,000,000		11,820,000		11,880,000	4.91	%
	Merge Healthcare Inc.
		Healthcare Services	First lien(3)	11.75%	5/1/2015	11,000,000		10,808,642		11,770,000	4.87	%
	Merrill Communications LLC
		Business Services	First lien(3)	8.50% (Base Rate + 6.50%)	12/22/2012	11,421,788		9,332,773		11,393,234	4.71	%
	PODS Holding Funding Corp.
		Consumer Services	Subordinated	16.64%	12/23/2015	11,664,000		10,137,299		10,117,351	4.18	%
	Vertafore, Inc
		Software	Second lien(3)	9.75% (Base Rate + 8.25%)	10/29/2017	10,000,000		9,901,457		10,106,250	4.18	%
	CHG Companies, Inc.
		Healthcare Services	Second lien(3)	11.25% (Base Rate + 9.50%)	4/7/2017	10,000,000		9,804,011		9,900,000	4.09	%

The accompanying notes are an integral part of these combined financial statements.

F-5

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments (Continued)
December 31, 2010

Portfolio Company, Location and Industry			Type of Investment	Interest Rate			Cost			Fair Value

	First Data Corporation
		Business Services	First lien(3)	3.01% (Base Rate + 2.75%)	9/24/2014	10,646,143		7,932,011			9,842,273		4.07	%
	Focus Brands, Inc.
		Franchises	First lien(4)	7.25% (Base Rate + 5.50%)	11/5/2016	9,181,818		9,091,224			9,285,114		3.84	%
	Sunquest Information Systems, Inc.
		Healthcare Services	Second lien	9.75% (Base Rate + 8.50%)	6/16/2017	9,000,000		8,820,000			9,000,000		3.72	%
	Mach Gen, LLC
		Power Generation	Second lien	7.79% (Base Rate + 7.50%)	2/22/2015	11,145,736		8,580,242			7,803,431		3.23	%
	SSI Investments II Limited
		Education	Subordinated(3)	11.13%	6/1/2018	7,000,000		7,064,923			7,630,000		3.15	%
	Hyland Software, Inc.
		Software	First lien(4)	6.75% (Base Rate + 5.00%)	12/19/2016	7,500,000		7,425,000			7,528,125		3.11	%
	Wyle Services Corporation
		Federal Services	First lien(4)	7.75% (Base Rate + 5.75%)	3/25/2016	7,481,234		7,508,583			7,509,290		3.10	%
	RGIS Services, LLC
		Business Services	First lien(3)	2.80% (Base Rate + 2.50%)	4/30/2014	7,394,480		5,807,941			6,913,839
			First lien(1)	—	4/30/2013	5,000,000		(2,850,000	)		(406,350	)

						12,394,480		2,957,941			6,507,489		2.69	%

	Alion Science and Technology Corporation
		Federal Services	First lien(3)	12.00%	11/1/2014	6,073,149		5,392,607			6,273,057		2.59	%
	Kronos Incorporated
		Software	First lien(1)	—	6/11/2013	4,198,500		(629,775	)		(346,376	)
			Second lien(3)	6.05% (Base Rate + 5.75%)	6/11/2015	6,700,000		5,041,455			6,563,206

						10,898,500		4,411,680			6,216,830		2.57	%

	Bartlett Holdings, Inc.
		Industrial Services	First lien(4)	6.75% (Base Rate + 5.00%)	11/23/2016	6,000,000		5,940,644			6,037,500		2.50	%
	Ozburn-Hessey Holding Company LLC
		Logistics	Second lien	10.50% (Base Rate + 8.50%)	10/8/2016	6,000,000		5,874,951			5,985,000		2.47	%
	Vision Solutions, Inc.
		Software	First lien(4)	7.75% (Base Rate + 6.00%)	7/23/2016	5,775,000	$	5,662,174		$	5,753,344		2.38	%
	LVI Services, Inc
		Industrial Services	First lien(3)	9.25% (Base Rate + 7.50%)	3/31/2014	5,162,883		4,304,472			4,388,450		1.81	%
	Stratus Technologies, Inc.
		Information Technology	First lien	12.00%	3/29/2015	5,000,000		4,796,989			4,225,000		1.75	%
	ATI Acquisition Company
		Education	First lien(3)	8.25% (Base Rate + 5.99%)	12/30/2014	4,455,000		4,304,106			4,076,325		1.68	%
	Physiotherapy Associates, Inc. / Benchmark Medical, Inc.
		Healthcare Facilities	First lien(3)	7.50% (Base Rate + 4.25%)	6/28/2013	3,823,549		3,063,441			3,594,136		1.49	%
	Brickman Group Holdings, Inc.
		Business Services	First lien(4)	7.25% (Base Rate + 5.50%)	10/14/2016	3,000,000		3,035,496			3,042,501		1.26	%
	Datatel, Inc
		Software	Second lien(3)	10.25% (Base Rate + 8.25%)	12/9/2016	2,000,000		1,964,077			2,042,500		0.84	%
	Applied Systems, Inc.
		Software	Second lien	9.25% (Base Rate + 7.75%)	6/8/2017	2,000,000		1,980,093			2,009,166		0.83	%
	Education Management LLC
		Education	First lien(1)	—	6/1/2012	3,000,000		(1,215,000	)		(217,500	)	-0.09	%

Total United States						460,503,332		409,407,198			435,778,827		180.13	%

Total debt investments						464,980,832		413,764,349			440,524,977		182.09	%

Total investments							$	414,308,823		$	441,057,840		182.31	%

(1): Par Value amounts represent the undrawn portion of revolving credit facilities. Cost amounts represent the cash received at settlement date increased for paydowns at par minus the purchase price.
(2): The company is headquartered in Canada. The debt is issued in USD.
(3): The Debt Funding credit facility is collateralized by the indicated investments.
(4): The SLF credit facility is collateralized by the indicated investments.

The accompanying notes are an integral part of these combined financial statements.

F-6

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Operations (unaudited)

		Three months ended

		March 31, 2011		March 31, 2010
Investment income
	Interest income	$	11,168,047	$	8,888,188
	Other income		43,673		188,742

	Total investment income		11,211,720		9,076,930

Expenses
	Interest and other credit facility expenses		1,546,753		665,917
	Other general and administrative expenses		148,664		133,023
	Professional fees		53,156		52,035
	Management fee, net		34,000		17,749

	Total expenses		1,782,573		868,724

	Net investment income		9,429,147		8,208,206
	Realized gains on investments		5,892,330		20,943,779
	Net change in unrealized appreciation (depreciation) of investments		1,097,337		(2,805,993	)

	Net increase in capital resulting from operations	$	16,418,814	$	26,345,992

The accompanying notes are an integral part of these combined financial statements.

F-7

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Changes in Capital

			Three months ended March 31, 2011			Year ended December 31, 2010

			(unaudited)
Increase (Decrease) in net assets resulting from operations:
	Net investment income		$	9,429,147		$	37,464,261
	Realized gains on investments			5,892,330			66,287,267
	Net change in unrealized appreciation (depreciation) of investments			1,097,337			(39,959,267	)

		Net increase (decrease) in net assets resulting from operations		16,418,814			63,792,261
Distributions				(10,249,155	)		(115,940,206	)
Contributions				42,100,712			54,634,523

		Net increase in net assets		48,270,371			2,486,578
Capital at beginning of period				241,927,261			239,440,683

Capital at end of period			$	290,197,632		$	241,927,261

The accompanying notes are an integral part of these combined financial statements.

F-8

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Cash Flows (unaudited)

		Three months ended

		March 31, 2011			March 31, 2010
Cash flows from operating activities
Net increase in capital resulting from operations		$	16,418,814		$	26,345,992
Adjustments to reconcile net increase (decrease) in capital resulting from operations to net cash (used in) provided by operating activities:
	Purchase of investments		(88,582,500	)		(21,891,611	)
	Proceeds from sales and paydowns of investments		77,255,809			80,282,687
	Cash received for purchase of undrawn portion of revolving credit facility		1,260,000			—
	Amortization of purchase discount		(1,679,684	)		(4,349,770	)
	Realized gains on investments		(5,892,330	)		(20,943,779	)
	Net change in unrealized (appreciation) depreciation of investments		(1,097,337	)		2,805,993
	Non-cash interest		(226,711	)		(195,593	)
	Amortization of deferred credit facility costs		137,623			—
	Increase in receivable from unsettled securities sold		—			(10,596,235	)
	(Increase) decrease in interest receivable		(1,793,682	)		169,820
	Decrease (increase) in other assets		2,808			(54,876	)
	Decrease in payable for unsettled securities purchased		(66,902,500	)		(7,411,765	)
	Increase in other liabilities		159,997			61,212
	Increase (decrease) in payable to affiliates		77,294			(226,673	)
	Increase in interest payable		334,000			65,283

Net cash flows (used in) provided by operating activities			(70,528,399	)		44,060,685

Cash flows from financing activities
	Contributions		42,100,712			9,491,014
	Distributions		(10,249,155	)		(24,202,430	)
	Proceeds from Debt Funding credit facility		24,359,947			808,162
	Repayment of Debt Funding credit facility		(19,164,635	)		(11,408,000	)
	Proceeds from SLF credit facility		49,965,300			—
	Repayment of SLF credit facility		(29,431	)		—

Net cash flows provided by (used in) financing activities			86,982,738			(25,311,254	)

Net increase in cash and cash equivalents			16,454,339			18,749,431
Cash and cash equivalents at the beginning of the period			10,744,082			4,110,193

Cash and cash equivalents at the end of the period		$	27,198,421		$	22,859,624

Supplemental disclosure of cash flow information
	Interest paid	$	841,305		$	518,454
Non-cash financing activities:
	Accrual for deferred offering costs		1,544,500			—
	Accrual for deferred credit facility costs		856,521			—

The accompanying notes are an integral part of these combined financial statements.

F-9

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

1. Formation and Business Purposes

New Mountain Guardian (Leveraged), L.L.C. ("NMG (Leveraged)" or the "LLC") is a Delaware limited liability company formed on October 29, 2008 as an investment vehicle for New Mountain Guardian AIV, L.P. ("NMG AIV" or the "Partnership"). NMG AIV is the sole member of NMG (Leveraged). NMG AIV was formed by New Mountain Partners III, L.P. ("NMP III") as an alternative investment vehicle to invest in Permitted Debt Investments pursuant to the NMP III Second Amended and Restated Partnership Agreement, Amendment #2, passed by a majority of the limited partners. New Mountain Guardian Debt Funding, L.L.C. ("NMG DF") and New Mountain Guardian SPV Funding, L.L.C. ("NMG SLF") are Delaware limited liability companies formed on October 9, 2009 and October 7, 2010, respectively, as investment vehicles for NMG (Leveraged). NMG (Leveraged) is the sole member of both NMG DF and NMG SLF.

New Mountain Guardian Partners, L.P. ("NMGP") is a Delaware limited partnership formed on February 20, 2009 to achieve long-term capital appreciation through debt and debt-related investments. The General Partner of NMGP is New Mountain Guardian GP, L.L.C. (the "General Partner"), a Delaware limited liability company. The sole limited partner of NMGP is New Mountain Guardian Partners (Cayman), L.P. ("NMGP Cayman"). New Mountain Guardian Partners (Leveraged), L.L.C. ("NMGP Leveraged") and New Mountain Guardian Partners Debt Funding, L.L.C. ("NMGP DF") are both Delaware limited liability companies that were formed on October 9, 2009 as investment vehicles for NMGP. NMGP is the sole member of NMGP Leveraged and NMGP Leveraged is the sole member of NMGP DF. On October 7, 2010, New Mountain Guardian Partners SPV Funding, L.L.C. ("NMGP SLF") was formed as an additional investment vehicle with NMGP Leveraged as its sole member. The Investment Period ends at the later of September 30, 2011 or the date at which the Combined Entities (defined below) have their initial public offering.

For financial statement purposes, NMG DF and NMG SLF are consolidated into NMG (Leveraged) and NMGP DF and NMGP SLF are consolidated into NMGP Leveraged. NMGP Leveraged is consolidated into NMGP. NMG (Leveraged) and NMGP are combined in these financial statements. As used herein, references to the "Combined Entities" refers to the combined NMG (Leveraged) and NMGP. These entities have been combined as they are under common control and management.

2. Summary of Significant Accounting Policies

Basis of accounting — The combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The combined financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition for all periods presented. All intercompany transactions have been eliminated. Revenues are recognized when earned and expenses when incurred.

Investments — The Combined Entities account for their investments at fair value. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected on the Combined Statements of Assets, Liabilities and Capital at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Combined Statements of Operations as "Net change in unrealized appreciation (depreciation) of investments" and

F-10

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

2. Summary of Significant Accounting Policies (Continued)

realizations on portfolio investments reflected in the Combined Statements of Operations as "Realized gains on investments."

To determine the fair value of the investments, the Combined Entities use market quotations if readily available or indicative prices from pricing services or brokers or dealers if market quotations are not readily available. The Combined Entities may corroborate the quoted price with the same or similar transactions that a broker or others have entered into. When neither the market quotations nor indicative prices are readily available, the Combined Entities may estimate the fair value using the market approach and/or the income approach, each of which involve a significant degree of judgment, or by using independent valuation firms at least once annually if a materiality threshold is met.

Management of the Combined Entities is responsible for determining the fair value of the investments.

The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated.

Investment transactions are recorded on a trade date basis.

See Note 3,Investments, for further discussion relating to the Combined Entities' investments.

Revenue recognition — The Combined Entities' Revenue Recognition policies are as follows:

Sales and paydowns of investments: Realized gains and losses on investments are determined on the specific identification method.

Interest income: Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. The Combined Entities have loans in their portfolio that contain a payment-in-kind ("PIK") provision. PIK represents interest that is accrued and recorded as interest income at the contractual rates, added to the loan principal on the respective capitalization dates, and generally due at maturity.

Other income: Other income represents delayed compensation and miscellaneous fees received. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date.

Interest and other credit facility expenses — Interest and other credit facility fees are recorded on an accrual basis. See Note 8,Credit Facility, for details.

Income taxes — NMG (Leveraged), NMG DF, and NMG SLF are single member limited liability companies which are disregarded for federal, state, and local income tax purposes. The assets, liabilities, investment income, and expenses of NMG (Leveraged), NMG DF, and NMG SLF are recorded on the federal and state income tax returns of NMG AIV, the ultimate sole owner.

F-11

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

2. Summary of Significant Accounting Policies (Continued)

NMGP (Leveraged), NMGP DF, and NMGP SLF are single member limited liability companies, which are disregarded for federal, state, and local income tax purposes. The assets, liabilities, investment income, and expenses of NMGP (Leveraged), NMGP DF, and NMGP SLF are recorded on the federal and state income tax returns of NMGP, the ultimate sole owner.

NMG AIV and NMGP are partnerships and are themselves not subject to income taxes. Each partner of NMG AIV and NMGP is individually responsible for reporting income or loss, to the extent required by federal and state income tax laws and regulations, based upon its respective share of each Partnership's net taxable income. Accordingly, income taxes have not been provided for in the accompanying combined financial statements.

The tax years from 2008 through the present of NMG AIV and the tax years from 2009 through the present for NMGP remain subject to examination by the U.S. Federal, state, and local tax authorities.

Cash and cash equivalents — The Combined Entities consider cash and cash equivalents to be cash and short-term, highly liquid investments with original maturities of three months or less.

Carried interest — Carried Interest is comprised of two amounts. First, amounts on unrealized appreciation and interest income are allocated to the General Partner of NMGP on the assumption that NMGP ceased operations on March 31, 2011 and liquidated its investments at the current valuation. In this hypothetical scenario the General Partner would be due these amounts on the distribution of proceeds raised from the liquidation. The second amount is any actual distribution of Carried Interest made during the reporting period.

The General Partner received no distributions of carried interest as of March 31, 2011 or December 31, 2010. For the three months ended March 31, 2011 and March 31, 2010, the General Partner was allocated $79,928 and $125,056 of Unrealized Carried Interest, respectively. NMG (Leveraged) does not have any allocations or payments of Carried Interest as it is structured as a limited liability company. Carried Interest is allocated to and paid from NMG AIV.

Foreign securities — The accounting records of the Combined Entities are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Combined Entities do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with "Net change in unrealized appreciation (depreciation) of investments" and "Realized gains on investments" in the Combined Statements of Operations.

Certain of the Combined Entities' investments are denominated in foreign currencies that may be negatively affected by movements in the rate of exchange between the United States dollar and such foreign currencies. This movement is beyond the control of the Combined Entities and cannot be predicted.

F-12

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

2. Summary of Significant Accounting Policies (Continued)

Deferred offering costs — Offering costs consist of fees related to legal, accounting, regulatory, and printing work in connection with the proposed initial public offering of the Combined Entities. These costs will be charged against the proceeds of the equity offering when received.

Deferred credit facility costs — Deferred credit facility costs consist of expenses related to the origination of the existing credit facilities. These expenses are amortized using the straight-line method over the stated life of the related credit facility. See Note 8,Credit Facility, for details.

Use of estimates — The preparation of the combined financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in the economic environment, financial markets, and other metrics used in determining these estimates could cause actual results to differ from the estimates used, and the differences could be material.

3. Investments

At March 31, 2011 investments consisted of the following:

Investment Cost and Fair Value by Type

	Cost		Fair Value

First lien	$	298,297,450	$	314,514,176
Second lien		113,449,741		124,135,412
Subordinated		19,860,405		20,885,878
Equity and other		566,643		485,127

Total investments	$	432,174,239	$	460,020,593

F-13

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

3. Investments (Continued)

Investment Cost and Fair Value by Industry

	Cost		Fair Value

Business Services	$	40,597,744	$	46,191,981
Consumer Services		24,682,783		25,329,653
Education		30,032,113		32,034,830
Energy		3,283,321		3,570,810
Federal Services		30,804,473		31,920,165
Franchises		5,905,511		5,983,021
Healthcare Facilities		3,113,900		3,819,775
Healthcare Information Technology		13,760,733		13,930,087
Healthcare Services		83,155,943		92,181,032
Industrial Services		25,122,414		25,153,978
Information Services		16,171,811		16,417,500
Information Technology		6,684,316		6,553,034
Logistics		5,878,626		6,090,000
Media		11,825,400		12,060,000
Power Generation		8,908,119		9,129,787
Software		110,449,121		117,445,540
Telecommunication		11,797,911		12,209,400

Total investments	$	432,174,239	$	460,020,593

At December 31, 2010 investments consisted of the following:

Investment Cost and Fair Value by Type

	Cost		Fair Value

First lien	$	303,924,269	$	321,212,659
Second lien		90,027,745		98,934,554
Subordinated		19,812,335		20,377,764
Equity and other		544,474		532,863

Total investments	$	414,308,823	$	441,057,840

F-14

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

3. Investments (Continued)

Investment Cost and Fair Value by Industry

	Cost		Fair Value

Business Services	$	53,482,718	$	61,657,732
Consumer Services		24,665,157		25,173,367
Education		30,015,648		31,505,814
Energy		4,357,151		4,746,150
Federal Services		30,834,041		31,796,045
Franchises		9,091,224		9,285,114
Healthcare Facilities		3,063,441		3,594,136
Healthcare Information Technology		13,790,000		13,965,000
Healthcare Services		88,073,362		94,834,674
Industrial Services		10,245,116		10,425,950
Information Technology		4,854,762		4,280,423
Logistics		5,874,951		5,985,000
Media		11,820,000		11,880,000
Power Generation		8,580,242		7,803,431
Software		103,739,377		111,885,004
Telecommunication		11,821,633		12,240,000

Total investments	$	414,308,823	$	441,057,840

As of March 31, 2011 and December 31, 2010, there were no assets being accounted for on a non-accrual basis.

As of March 31, 2011 and December 31, 2010, the Combined Entities have unfunded commitments on revolving credit facilities of $22,698,500 and $12,198,500, respectively, which are disclosed on the Combined Schedules of Investments.

4. Fair Value

Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Codification 820,Fair Value Measurement and Disclosure, ("ASC 820") establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. This hierarchy consists of three levels. The inputs used to measure fair value may fall into different levels. The level within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The Combined Entities' assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

The hierarchy classifies the inputs used in measuring fair value as follows:

F-15

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

4. Fair Value (Continued)

securities and listed derivatives. As required by ASC 820, the Combined Entities, to the extent that they hold such investments, do not adjust the quoted price for these investments, even in situations where the Combined Entities hold a large position and a sale could reasonably impact the quoted price.

Level II — Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Fair value is determined through the use of a pricing service or broker, models, or other valuation methodologies.

Level III — Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant judgment or estimation by Management.

A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the reclassification of certain investments within the fair value hierarchy.

The following table summarizes the levels in the fair value hierarchy that the Combined Entities' portfolio investments fall into as of March 31, 2011:

	Total		Level I		Level II		Level III

First lien	$	314,514,176	$	—	$	298,569,604	$	15,944,572
Second lien		124,135,412		—		124,135,412		—
Subordinated		20,885,878		—		7,875,000		13,010,878
Equity and other		485,127		—		—		485,127

Total investments	$	460,020,593	$	—	$	430,580,016	$	29,440,577

The following table summarizes the levels in the fair value hierarchy that the Combined Entities' portfolio investments fall into as of December 31, 2010:

	Total		Level I		Level II		Level III

First lien	$	321,212,659	$	—	$	304,237,325	$	16,975,334
Second lien		98,934,554		—		98,934,554		—
Subordinated		20,377,764		—		7,630,000		12,747,764
Equity and other		532,863		—		—		532,863

Total investments	$	441,057,840	$	—	$	410,801,879	$	30,255,961

The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended March 31, 2011, as well as the portion of appreciation (depreciation)

F-16

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

4. Fair Value (Continued)

included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held at March 31, 2011:

		Total			First Lien			Subordinated		Equity and other

Fair value, December 31, 2010		$	30,255,961		$	16,975,334		$	12,747,764	$	532,863
Total gains or losses included in earnings:
	Net change in unrealized appreciation (depreciation)		611,296			418,088			263,114		(69,906	)
Purchases, including capitalized PIK			(1,237,830	)		(1,260,000	)		—		22,170
Transfers into Level III(1)			(406,350	)		(406,350	)		—		—
Transfers out of Level III(2)			217,500			217,500			—		—

Fair value, March 31, 2011		$	29,440,577		$	15,944,572		$	13,010,878	$	485,127

Unrealized appreciation (depreciation) for the period relating to those Level III assets that were still held by the Combined Entities at the end of the period:		$	611,296		$	418,088		$	263,114	$	(69,906	)

(1): The transfer into Level III represents the transfer of RGIS Services, LLC at a fair value of ($406,350). In accordance with the Combined Entities' valuation policy, this asset was transferred from a Level II investment to a Level III investment during the three months ended March 31, 2011 as available market quotes were not representative of fair value.
(2): The transfer out of Level III represents the transfer of Education Management Corporation at a fair value of $217,500. In accordance with the Combined Entities' valuation policy, this asset was transferred from a Level III investment to a Level II investment during the three months ended March 31, 2011 as market quotes representative of fair value became available.

F-17

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

4. Fair Value (Continued)

The following table summarizes the changes in fair value of Level III portfolio investments for the year ended December 31, 2010, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held at December 31, 2010:

		Total			First Lien			Subordinated		Equity and other

Fair value, December 31, 2009		$	—		$	—		$	—	$	—
Total gains or losses included in earnings:
	Net change in unrealized appreciation (depreciation)		146,416			157,678			349		(11,611	)
Purchases, including capitalized PIK(1)(2)			30,349,545			17,057,656			12,747,415		544,474
Transfers into Level III(3)			(240,000	)		(240,000	)		—		—

Fair value, December 31, 2010		$	30,255,961		$	16,975,334		$	12,747,764	$	532,863

Unrealized appreciation (depreciation) for the period relating to those Level III assets that were still held by the Combined Entities at the end of the period:		$	146,416		$	157,678		$	349	$	(11,611	)

(1): Includes net amortization of purchase discounts or premiums of approximately $184,263, $36,603, and $147,660, and $0, respectively.
(2): The purchases include the purchase of PODS Holding Funding Corp. at a cost of $8,433,541. In accordance with the Combined Entities' valuation policy, this asset was transferred from a Level II investment to a Level III investment during the three months ended September 30, 2010.
(3): The transfer into Level III represents the transfer of Education Management Corporation at a fair value of ($240,000). In accordance with the Combined Entities' valuation policy, this asset was transferred from a Level II investment to a Level III investment during the three months ended December 31, 2010.

Investments are transferred using the fair value as of the beginning of each year to date period. Except as noted in the table above, there were no other transfers in or out of Level I, II, or III during the three months ended March 31, 2011 and the year ended December 31, 2010.

Fair value risk factors — The Combined Entities seek investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the Combined Entities' investments conduct their operations, as well as general economic and political conditions, may have a significant negative impact on the operations and profitability of the Combined Entities' investments and/or on the fair value of the Combined Entities' investments.

F-18

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

4. Fair Value (Continued)

Also, there may be risk associated with the concentration of investments in one geographic region or in certain industries.

The above events are beyond the control of the Combined Entities and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.

5. Allocations of Distributions and Profits and Losses

Items of income, expense, gain, and loss of NMG (Leveraged) are allocated to its sole member NMG AIV. Items of income, expense, gain, and loss of NMGP are allocated to its partners in accordance with the Partnership Agreement of NMGP.

6. Management of the Combined Entities

NMG (Leveraged) has appointed New Mountain Capital, L.L.C. ("New Mountain Capital") and NMGP has appointed New Mountain Guardian Advisers, L.L.C. ("New Mountain Guardian Advisers") as the investment advisers and Managers of the Combined Entities. A Management Fee is not charged to NMG (Leveraged), as it is paid to New Mountain Capital by NMP III. A Management Fee is earned by New Mountain Guardian Advisers. During the Investment Period, the Management Fee is equal to 0.875% per annum of Capital Commitments of NMGP Cayman and, thereafter, is equal to 0.5% per annum of the Actively Invested Capital of NMGP Cayman as of the relevant Payment Date. The Management Fee is reduced, but not below zero, by (a) Placement fees paid by NMGP Cayman since the preceding Payment Date; (b) 65% of the break-up, transaction and/or monitoring fees received in the preceding year by the Manager and (c) NMGP's share of organization costs paid in excess of $1 million. Gross management fee for the three months ended March 31, 2011 of $43,750 was reduced by $9,750 relating to transaction fees. Gross management fee for the three months ended March 31, 2010 of $43,750 was reduced by $26,001 relating to transaction fees.

7. Related Parties

Payable to affiliates represents amounts payable to New Mountain Capital for amounts paid on behalf of the Combined Entities.

8. Credit Facility

Debt Funding Credit Facility:

The Loan and Security Agreement dated October 21, 2009 among NMG (Leveraged) as the Collateral Manager, NMG DF as the borrower, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 21, 2014. The maximum amount of revolving borrowings available under the credit facility is $112,500,000. The outstanding balance of this facility as of March 31, 2011 and December 31, 2010 was $61,279,180 and $59,696,938, respectively. The credit facility is collateralized by the investments of NMG DF on an investment by investment basis, totaling $235,688,607 as of March 31, 2011 and $215,393,015 as of December 31, 2010. NMG DF was in compliance with all of its debt covenants as of March 31, 2011 and December 31, 2010.

F-19

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

8. Credit Facility (Continued)

The Loan and Security Agreement dated November 19, 2009 among NMGP Leveraged as the Collateral Manager, NMGP DF as the borrower, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 21, 2014. The maximum amount of revolving borrowings available under this credit facility is $7,500,000. The outstanding balance of this facility as of March 31, 2011 was $3,613,068. There was no outstanding balance of this facility as of December 31, 2010. The credit facility is collateralized by the investments of NMGP DF on an investment by investment basis, totaling $14,234,832 as of March 31, 2011 and $12,081,913 as of December 31, 2010. NMGP DF was in compliance with all of its debt covenants as of March 31, 2011 and December 31, 2010.

The credit facilities of NMG DF and NMGP DF (together, the "Debt Funding Credit Facility") bear interest at a rate of LIBOR plus 3.00% per annum. A commitment fee is also paid, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the credit agreement). Interest expense and commitment fees were $527,347 and $198,675, respectively, on a combined basis for the three months ended March 31, 2011. Interest expense and commitment fees were $580,740 and $60,177, respectively, on a combined basis for the three months ended March 31, 2010. The weighted average interest rate for the three months ended March 31, 2011 and March 31, 2010 for each facility was 3.3% and 3.2%, respectively.

A First Amendment to the Loan and Security Agreements among NMG DF and NMGP DF as the borrowers, Wells Fargo Securities, LLC as Administrative Agent, and Wells Fargo Bank, National Association, as Collateral Custodian was executed on August 6, 2010 and August 10, 2010, respectively. These amendments grant the entities leverage through the use of non-first lien debt investments as collateral. The un-amended facility only permitted the use of first lien debt instruments as collateral. The Debt Funding Credit Facility permits borrowings of up to 45% and 25% of the purchase price of pledged debt securities subject to approval by Wells Fargo Bank, N.A. of first lien and non-first lien debt investments, respectively.

SLF Credit Facility:

The Loan and Security Agreement dated October 27, 2010 among NMG SLF as the borrower, NMG (Leveraged) as the Collateral Administrator, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 27, 2015. A Second Amendment to the Loan and Security Agreement was executed on March 9, 2011. This amendment increased the maximum amount of revolving borrowings available under this credit facility from $93,750,000 to $140,625,000. The outstanding balance of this facility as of March 31, 2011 and December 31, 2010 was $100,149,061 and $53,312,360, respectively. The loan is non-recourse to NMG (Leveraged) and secured by all assets owned by the borrower, which includes the investments of NMG SLF totaling $165,775,466 as of March 31, 2011 and $161,548,326 as of December 31, 2010. NMG SLF was in compliance with all of its debt covenants as of December 31, 2010.

F-20

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

8. Credit Facility (Continued)

structured as a revolving credit facility and matures on October 27, 2015. A Second Amendment to the Loan and Security Agreement was executed on March 9, 2011. This amendment increased the maximum amount of revolving borrowings available under this credit facility from $6,250,000 to $9,375,000. The outstanding balance of this facility as of March 31, 2011 and December 31, 2010 was $6,722,807 and $3,623,640, respectively. The loan is non-recourse to NMGP and secured by all assets owned by the borrower, which includes the investments of NMGP SLF totaling $11,272,731 as of March 31, 2011 and $10,985,286 as of December 31, 2010. NMGP SLF was in compliance with all of its debt covenants as of March 31, 2011 and December 31, 2010.

The credit facilities of NMG SLF and NMGP SLF (together, the "SLF Credit Facility") permit borrowings of up to 67.0% of the purchase price of pledged debt securities subject to approval by Wells Fargo Bank, N.A. and bear interest at a rate of LIBOR plus 2.25% per annum. A commitment fee is paid, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the credit agreement). For the three months ended March 31, 2011, interest expense and commitment fees for the SLF Credit Facility were $617,757 and $17,850, respectively, on a combined basis. The weighted average interest rate for the three months ended March 31, 2011 for each facility was 2.5%.

9. Commitments and Contingencies

In the normal course of business, the Combined Entities enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. In addition, under the terms of the LLC Agreement and limited partnership agreement, the Combined Entities have agreed to indemnify Management, its officers, directors, employees, agents or any person who serves on behalf of the Combined Entities from any loss, claim, damage, or liability which such person incurs by reason of his performance of activities of the Combined Entities, provided they acted in good faith. Based on experience, Management expects the risk of loss related to the Combined Entities' indemnifications to be remote.

The Combined Entities have unfunded commitments on revolving credit facilities, which are disclosed on the Combined Schedules of Investments and in Note 3,Investments.

The Combined Entities may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. As of March 31, 2011 and December 31, 2010, the Combined Entities had no outstanding bridge financing commitments.

The Combined Entities have revolving borrowings available under credit facilities. See Note 8,Credit Facility, for details.

10. Financial Highlights

Financial highlights are calculated for the Combined Entities as a whole. The total return is the ratio of net increase (decrease) in capital resulting from operations compared to capital, adjusted

F-21

NOTES TO THE COMBINED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
March 31, 2011

10. Financial Highlights (Continued)

for average capital contributions and distributions. The ratios to average capital have been annualized.


Total Return for the three months ended March 31, 2011	6.2	%
Total Return for the three months ended March 31, 2010	11.4	%

Ratios to Average Capital for the three months ended March 31, 2011:


Expenses, excluding carried interest		2.7	%
Carried interest		0.1	%

	Total expenses and carried interest	2.8	%

Net investment income		14.2	%

Ratios to Average Capital for the three months ended March 31, 2010:


Expenses, excluding carried interest		1.5	%
Carried interest		0.2	%

	Total expenses and carried interest	1.7	%

Net investment income		14.3	%

11. Recent Accounting Standards Updates

12. Subsequent Events

The Combined Entities have evaluated subsequent events through May 13, 2011, which is the date that these combined financial statements were available to be issued. No subsequent events were noted.

F-22

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Member of New Mountain Guardian (Leveraged), L.L.C. and
To the Partners of New Mountain Guardian Partners, L.P.

We have audited the accompanying combined statements of assets, liabilities and capital, including the combined schedules of investments, of New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P. (the "Entities"), both of which are under common control and management, as of December 31, 2010 and 2009, and the related combined statements of operations, changes in capital, and cash flows for the years ended December 31, 2010 and 2009 and for the period October 29, 2008 (commencement of operations) to December 31, 2008. These financial statements are the responsibility of the Entities' management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Entities are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entities' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the combined financial position of the Entities as of December 31, 2010 and 2009, and the combined results of their operations, their combined changes in capital and their combined cash flows for the years ended December 31, 2010 and 2009 and for the period October 29, 2008 (commencement of operations) to December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

As explained in Notes 2 and 4 to the financial statements, the financial statements include investments valued at $30,255,961 (6.6% of total assets) as of December 31, 2010, whose fair values have been estimated by the Entities' management in the absence of readily determinable fair values.

/s/ Deloitte and Touche LLP
New York, New York

February 25, 2011
(March 28, 2011 as to Note 12)


		Member of Deloitte Touche Tohmatsu

F-23

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Assets, Liabilities and Capital

		December 31, 2010		December 31, 2009

Assets
	Investments, at fair value (cost $414,308,823 and $253,814,364 respectively)	$	441,057,840	$	320,522,648
	Cash and cash equivalents		10,744,082		4,110,193
	Receivable from unsettled securities sold		—		5,124,622
	Deferred offering costs		3,528,110		—
	Interest receivable		3,007,787		798,762
	Deferred credit facility costs (net of accumulated amortization of $69,909 and $0 respectively)		1,880,120		—
	Other assets		5,842		1,407

	Total assets	$	460,223,781	$	330,557,632

Liabilities
	Payable for unsettled securities purchased		94,462,500		12,232,265
	Debt Funding credit facility		59,696,938		77,744,675
	SLF credit facility		56,936,000		—
	Other liabilities		3,856,571		274,641
	Payable to affiliates		2,531,319		392,679
	Interest payable		813,192		472,689

	Total liabilities		218,296,520		91,116,949
Capital			241,927,261		239,440,683

	Total liabilities and capital	$	460,223,781	$	330,557,632

The accompanying notes are an integral part of these combined financial statements.

F-24

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments
December 31, 2010

Portfolio Company, Location and Industry			Type of Investment	Interest Rate			Cost		Fair Value

United States
	Stratus Technologies, Inc.
		Information Technology	Ordinary shares	—	—	103,050	$	47,063	$	45,149
			Preferred shares	—	—	23,450		10,710		10,274

								57,773		55,423	0.02	%

Total shares								57,773		55,423	0.02	%

United States
	Alion Science and Technology Corporation
		Federal Services	Warrants(3)	—	—	6,000		292,851		283,698	0.12	%
	Learning Care Group (US), Inc.
		Education	Warrants	—	—	845		193,850		193,742	0.08	%

Total warrants								486,701		477,440	0.20	%

Canada
	Trident Exploration Corp.(2)
		Energy	First lien(3)	12.50% (Base Rate + 9.50%)	6/30/2014	4,477,500		4,357,151		4,746,150	1.96	%

Total Canada						4,477,500		4,357,151		4,746,150	1.96	%

United States
	Managed Health Care Associates, Inc.
		Healthcare Services	First lien(3)	3.52% (Base Rate + 3.25%)	8/1/2014	22,467,673		17,462,237		20,557,920
			Second lien(3)	6.77% (Base Rate + 6.50%)	2/1/2015	15,000,000		11,227,497		13,200,001

						37,467,673		28,689,734		33,757,921	13.96	%

	Attachmate Corporation, NetIQ Corporation
		Software	Second lien(3)	7.04% (Base Rate + 6.75%)	10/13/2013	22,500,000		17,121,571		22,275,000	9.21	%
	Learning Care Group (US), Inc.
		Education	First lien(3)	12.00%	4/27/2016	17,368,422		17,057,656		17,192,834
			Subordinated	15.00%	6/30/2016	2,832,237		2,610,113		2,630,413

						20,200,659		19,667,769		19,823,247	8.19	%

	Decision Resources, LLC
		Business Services	First lien(4)	7.75% (Base Rate + 4.50%)	12/28/2016	18,000,000		17,730,000		17,820,001	7.37	%
	KeyPoint Government Solutions, Inc
		Federal Services	First lien(3)	10.00% (Base Rate + 8.00%)	12/31/2015	18,000,000		17,640,000		17,730,000	7.33	%
	Smile Brands Group, Inc.
		Healthcare Services	First lien(4)	7.50% (Base Rate + 4.25%)	12/21/2017	17,500,000		17,237,500		17,390,625	7.19	%
	Volume Services America, Inc. (Centerplate)
		Consumer Services	First lien(3)	10.50% (Base Rate + 8.50%)	9/16/2016	14,962,500		14,527,858		15,056,016	6.22	%
	MLM Holdings, Inc.
		Software	First lien(4)	7.00% (Base Rate + 5.25%)	12/1/2016	14,962,500		14,739,863		14,775,469	6.11	%
	LANDesk Software, Inc.
		Software	First lien(4)	7.00% (Base Rate + 5.25%)	3/28/2016	15,000,000		14,701,917		14,718,750	6.08	%
	SonicWALL, Inc.
		Software	First lien(4)	8.26% (Base Rate + 6.19%)	1/23/2016	4,485,887		4,507,797		4,519,531
			Second lien(3)	12.00% (Base Rate + 10.00%)	1/23/2017	10,000,000		9,712,391		10,050,000

						14,485,887		14,220,188		14,569,531	6.02	%

	Virtual Radiologic Corporation
		Healthcare Information Technology	First lien(4)	7.75% (Base Rate + 4.50%)	12/22/2016	14,000,000		13,790,000		13,965,000	5.77	%
	Asurion, LLC
		Business Services	First lien(4)	6.75% (Base Rate + 5.25%)	3/31/2015	13,000,000		12,494,497		13,052,234	5.40	%
	Aspen Dental Management, Inc.
		Healthcare Services	First lien(4)	7.72% (Base Rate + 6.00%)	10/6/2016	12,967,500		12,713,475		13,016,128	5.38	%
	Firefox Merger Sub, LLC (f/k/a Fibertech Networks, LLC)
		Telecommunication	First lien(4)	6.75% (Base Rate + 5.00%)	11/30/2016	12,000,000		11,821,633		12,240,000	5.06	%
	Airvana Network Solutions Inc.
		Software	First lien(3)	11.00% (Base Rate + 9.00%)	8/27/2014	11,833,333		11,611,357		11,890,039	4.91	%
	Mailsouth, Inc.
		Media	First lien(4)	7.00% (Base Rate + 3.75%)	12/14/2016	12,000,000		11,820,000		11,880,000	4.91	%
	Merge Healthcare Inc.
		Healthcare Services	First lien(3)	11.75%	5/1/2015	11,000,000		10,808,642		11,770,000	4.87	%
	Merrill Communications LLC
		Business Services	First lien(3)	8.50% (Base Rate + 6.50%)	12/22/2012	11,421,788		9,332,773		11,393,234	4.71	%

The accompanying notes are an integral part of these combined financial statements.

F-25

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments
December 31, 2010

Portfolio Company, Location and Industry			Type of Investment	Interest Rate			Cost			Fair Value

	PODS Holding Funding Corp.
		Consumer Services	Subordinated	16.64%	12/23/2015	11,664,000	$	10,137,299		$	10,117,351		4.18	%
	Vertafore, Inc
		Software	Second lien(3)	9.75% (Base Rate + 8.25%)	10/29/2017	10,000,000		9,901,457			10,106,250		4.18	%
	CHG Companies, Inc.
		Healthcare Services	Second lien(3)	11.25% (Base Rate + 9.50%)	4/7/2017	10,000,000		9,804,011			9,900,000		4.09	%
	First Data Corporation
		Business Services	First lien(3)	3.01% (Base Rate + 2.75%)	9/24/2014	10,646,143		7,932,011			9,842,273		4.07	%
	Focus Brands, Inc.
		Franchises	First lien(4)	7.25% (Base Rate + 5.50%)	11/5/2016	9,181,818		9,091,224			9,285,114		3.84	%
	Sunquest Information Systems, Inc.
		Healthcare Services	Second lien	9.75% (Base Rate + 8.50%)	6/16/2017	9,000,000		8,820,000			9,000,000		3.72	%
	Mach Gen, LLC
		Power Generation	Second lien	7.79% (Base Rate + 7.50%)	2/22/2015	11,145,736		8,580,242			7,803,431		3.23	%
	SSI Investments II Limited
		Education	Subordinated(3)	11.13%	6/1/2018	7,000,000		7,064,923			7,630,000		3.15	%
	Hyland Software, Inc.
		Software	First lien(4)	6.75% (Base Rate + 5.00%)	12/19/2016	7,500,000		7,425,000			7,528,125		3.11	%
	Wyle Services Corporation
		Federal Services	First lien(4)	7.75% (Base Rate + 5.75%)	3/25/2016	7,481,234		7,508,583			7,509,290		3.10	%
	RGIS Services, LLC
		Business Services	First lien(3)	2.80% (Base Rate + 2.50%)	4/30/2014	7,394,480		5,807,941			6,913,839
			First lien(1)	—	4/30/2013	5,000,000		(2,850,000	)		(406,350	)

						12,394,480		2,957,941			6,507,489		2.69	%

	Alion Science and Technology Corporation
		Federal Services	First lien(3)	12.00%	11/1/2014	6,073,149		5,392,607			6,273,057		2.59	%
	Kronos Incorporated
		Software	First lien(1)	—	6/11/2013	4,198,500		(629,775	)		(346,376	)
			Second lien(3)	6.05% (Base Rate + 5.75%)	6/11/2015	6,700,000		5,041,455			6,563,206

						10,898,500		4,411,680			6,216,830		2.57	%

	Bartlett Holdings, Inc.
		Industrial Services	First lien(4)	6.75% (Base Rate + 5.00%)	11/23/2016	6,000,000		5,940,644			6,037,500		2.50	%
	Ozburn-Hessey Holding Company LLC
		Logistics	Second lien	10.50% (Base Rate + 8.50%)	10/8/2016	6,000,000		5,874,951			5,985,000		2.47	%
	Vision Solutions, Inc.
		Software	First lien(4)	7.75% (Base Rate + 6.00%)	7/23/2016	5,775,000		5,662,174			5,753,344		2.38	%
	LVI Services, Inc
		Industrial Services	First lien(3)	9.25% (Base Rate + 7.50%)	3/31/2014	5,162,883		4,304,472			4,388,450		1.81	%
	Stratus Technologies, Inc.
		Information Technology	First lien	12.00%	3/29/2015	5,000,000		4,796,989			4,225,000		1.75	%
	ATI Acquisition Company
		Education	First lien(3)	8.25% (Base Rate + 5.99%)	12/30/2014	4,455,000		4,304,106			4,076,325		1.68	%
	Physiotherapy Associates, Inc. / Benchmark Medical, Inc.
		Healthcare Facilities	First lien(3)	7.50% (Base Rate + 4.25%)	6/28/2013	3,823,549		3,063,441			3,594,136		1.49	%
	Brickman Group Holdings, Inc.
		Business Services	First lien(4)	7.25% (Base Rate + 5.50%)	10/14/2016	3,000,000		3,035,496			3,042,501		1.26	%
	Datatel, Inc
		Software	Second lien(3)	10.25% (Base Rate + 8.25%)	12/9/2016	2,000,000		1,964,077			2,042,500		0.84	%
	Applied Systems, Inc.
		Software	Second lien	9.25% (Base Rate + 7.75%)	6/8/2017	2,000,000		1,980,093			2,009,166		0.83	%
	Education Management LLC
		Education	First lien(1)	—	6/1/2012	3,000,000		(1,215,000	)		(217,500	)	-0.09	%

Total United States						460,503,332		409,407,198			435,778,827		180.13	%

Total debt investments						464,980,832		413,764,349			440,524,977		182.09	%

Total investments							$	414,308,823		$	441,057,840		182.31	%

(1): Par Value amounts represent the undrawn portion of revolving credit facilities. Cost amounts represent the cash received at settlement date increased for paydowns at par minus the purchase price.
(2): The company is headquartered in Canada. The debt is issued in USD.
(3): The Debt Funding credit facility is collateralized by the indicated investments.
(4): The SLF credit facility is collateralized by the indicated investments.

The accompanying notes are an integral part of these combined financial statements.

F-26

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments
December 31, 2009

Portfolio Company, Location and Industry			Type of Investment	Interest Rate		Principal Amount or Par Value		Cost			Fair Value

United States
	RGIS Services LLC
		Business Services	First lien(3)	2.77% (Base Rate + 2.50%)	4/30/2014	$	42,401,155	$	24,856,121		$	37,339,517
			First lien(1)	N/A	4/30/2013		5,000,000		(2,850,000	)		(801,225	)

							47,401,155		22,006,121			36,538,292		15.26	%

	Managed Health Care Associates, Inc.
		Healthcare Services	First lien(3)	3.49% (Base Rate + 3.25%)	8/1/2014		22,607,775		16,573,280			20,120,920
			Second lien	6.74% (Base Rate + 6.50%)	2/1/2015		15,000,000		10,606,416			11,325,000

							37,607,775		27,179,696			31,445,920		13.13	%

	Brand Energy & Infrastructure Services, Inc.
		Industrial Services	First lien(3)	2.56% (Base Rate + 2.25%)	2/7/2014		9,908,492		6,792,468			9,227,283
			First lien(3)	3.56% (Base Rate + 3.25%)	2/7/2014		11,290,356		7,427,605			10,542,369
			First lien(3)	0.31%	2/7/2014		2,626,906		1,557,038			2,364,216
			Second lien	6.31% (Base Rate + 6.00%)	2/7/2015		6,000,000		2,924,345			5,017,501

							29,825,754		18,701,456			27,151,369		11.34	%

	Kronos, Inc.
		Software	First lien(3)	2.25% (Base Rate + 2.00%)	6/11/2014		14,003,302		10,784,508			13,268,129
			First lien(1)	N/A	6/11/2013		4,198,500		(629,775	)		(535,308	)
			Second lien	6.00% (Base Rate + 5.75%)	6/11/2015		10,700,000		7,679,027			9,416,000

							28,901,802		17,833,760			22,148,821		9.25	%

	First Data Corporation
		Business Services	First lien(3)	3.00% (Base Rate + 2.75%)	9/24/2014		23,756,962		16,525,978			21,135,035		8.83	%
	CRC Health Corporation
		Healthcare Facilities	First lien(3)	2.50% (Base Rate + 2.25%)	2/6/2013		22,664,733		16,474,148			20,568,245		8.59	%
	CDW Corporation
		Distribution	First lien(3)	4.23% (Base Rate + 4.00%)	10/10/2014		21,942,591		17,949,214			18,968,579		7.92	%
	Attachmate Corporation
		Software	Second lien	7.00% (Base Rate + 6.75%)	10/13/2013		22,500,000		15,897,869			18,450,000		7.71	%
	Brock Holdings
		Industrial Services	First lien(3)	2.32% (Base Rate + 1.96%)	2/26/2014		18,873,478		14,892,436			15,712,170		6.56	%
	Laureate Education, Inc.
		Education	First lien(3)	3.53% (Base Rate + 3.25%)	8/15/2014		17,344,259		11,399,671			15,533,952		6.49	%
	Catalent Pharma Solutions, Inc. (f.k.a. Cardinal Health)
		Healthcare Products	First lien(3)	2.48% (Base Rate + 2.25%)	4/10/2014		13,315,510		9,910,051			11,368,117
			First lien(1)	N/A	4/10/2013		15,000,000		(6,350,000	)		(2,625,000	)
			Subordinated(2)	9.75%	4/15/2017		8,914,370		2,578,986			6,574,347

							37,229,880		6,139,037			15,317,464		6.40	%

	Sheridan Holdings, Inc.
		Healthcare Services	First lien(3)	2.50% (Base Rate + 2.25%)	6/13/2014		15,674,451		10,862,969			14,420,495		6.02	%
	Intralinks Holdco
		Software	Subordinated	13.00%	6/15/2015		18,313,821		8,883,957			11,354,569		4.74	%
	Merrill Communications LLC
		Business Services	First lien(3)	8.50% (Base Rate + 6.50%)	12/22/2012		11,421,788		8,625,678			9,151,708		3.82	%
	Ability Acquisitions, Inc
		Education	First lien	8.25% (Base Rate + 5.00%)	12/30/2014		4,500,000		4,320,000			4,387,500
			Subordinated	13.25% (Base Rate + 10.00%)	12/29/2015		4,500,000		4,410,000			4,410,000

							9,000,000		8,730,000			8,797,500		3.67	%

	Mach Gen, LLC
		Power Generation	Second lien	7.76% (Base Rate + 7.50%)	2/20/2015		10,311,269		7,385,760			7,016,819		2.93	%
	Berry Plastics Group, Inc.
		Packaging	First lien(3)	2.25% (Base Rate + 2.00%)	4/3/2015		7,918,575		5,591,155			6,911,435		2.89	%
	Mega Brands, Inc
		Consumer Products	First lien	9.75% (Base Rate + 6.25%)	7/26/2012		11,744,042		6,266,503			6,165,622		2.58	%
	Brickman Group, Ltd.
		Maintenance services	First lien(3)	2.25% (Base Rate + 2.00%)	1/23/2014		4,238,030		3,859,285			4,008,468		1.67	%

The accompanying notes are an integral part of these combined financial statements.

F-27

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Schedule of Investments (Continued)
December 31, 2009

		Type of Investment	Interest Rate		Principal Amount or Par Value		Cost			Fair Value

Physiotherapy Associates, Inc.
	Healthcare Facilities	First lien	7.50% (Base Rate + 4.25%)	6/28/2013	$	4,387,521	$	3,278,242		$	3,283,327		1.37	%
LVI Services, Inc
	Industrial Services	First lien	9.25% (Base Rate + 6.00%)	11/16/2011		4,354,396		3,046,874			2,830,358		1.18	%
Datatel, Inc
	Software	Second lien	10.25% (Base Rate + 8.25%)	12/9/2016		2,000,000		1,960,143			2,030,000		0.85	%
Sabre, Inc.
	Information Technology	First lien(3)	2.49% (Base Rate + 2.25%)	9/30/2014		2,000,000		1,539,412			1,822,500		0.76	%
Education Management Corporation
	Education	First lien(1)	N/A	6/1/2012		3,000,000		(1,215,000	)		(240,000	)	-0.10	%

					$	412,412,282	$	253,814,364		$	320,522,648		133.86	%

(1): Par Value amounts represent the undrawn portion of revolving credit facilities. Cost amounts represent the cash received at settlement date increased for paydowns at par minus the purchase price.
(2): Reported in USD (locally denominated in Euros)
(3): The credit facility is collateralized by the indicated investments.

The accompanying notes are an integral part of these combined financial statements.

F-28

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Operations

		Year ended December 31, 2010			Year ended December 31, 2009		Period from October 29, 2008 (commencement of operations) to December 31, 2008

Investment income
	Interest income	$	40,485,158		$	21,108,672	$	85,735
	Other income		889,619			658,035		170,208

	Total investment income		41,374,777			21,766,707		255,943

Expenses
	Interest and other credit facility expenses		2,948,460			490,189		—
	Other general and administrative expenses		563,726			351,952		—
	Professional fees		327,331			381,877		—
	Management fee, net		70,999			134,966		—

	Total expenses		3,910,516			1,358,984		—

	Net investment income		37,464,261			20,407,723		255,943
	Realized gains on investments		66,287,267			37,128,956		—
	Net change in unrealized (depreciation) appreciation of investments		(39,959,267	)		68,143,411		(1,435,127	)

	Net increase (decrease) in capital resulting from operations	$	63,792,261		$	125,680,090	$	(1,179,184	)

The accompanying notes are an integral part of these combined financial statements.

F-29

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Changes in Capital

			Year ended December 31, 2010			Year ended December 31, 2009			Period from October 29, 2008 (commencement of operations) to December 31, 2008

Increase (Decrease) in net assets resulting from operations:
	Net investment income		$	37,464,261		$	20,407,723		$	255,943
	Realized gains on investments			66,287,267			37,128,956			—
	Net change in unrealized (depreciation) appreciation of investments			(39,959,267	)		68,143,411			(1,435,127	)

		Net increase (decrease) in net assets resulting from operations		63,792,261			125,680,090			(1,179,184	)
Distributions				(115,940,206	)		(202,095,083	)		—
Contributions				54,634,523			285,501,773			31,533,087

		Net increase in net assets		2,486,578			209,086,780			30,353,903
Capital at beginning of period				239,440,683			30,353,903			—

Capital at end of period			$	241,927,261		$	239,440,683		$	30,353,903

The accompanying notes are an integral part of these combined financial statements.

F-30

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.

Combined Statements of Cash Flows

		Year ended December 31, 2010			Year ended December 31, 2009			Period from October 29, 2008 (commencement of operations) to December 31, 2008

Cash flows from operating activities
Net increase (decrease) in capital resulting from operations		$	63,792,261		$	125,680,090		$	(1,179,184	)
Adjustments to reconcile net increase (decrease) in capital resulting from operations to net cash provided by (used in) operating activities:
	Purchase of investments		(332,708,278	)		(274,180,589	)		(65,873,356	)
	Proceeds from sales and paydowns of investments		260,039,529			125,429,657			132,205
	Cash received for purchase of undrawn portion of revolving credit facility		—			5,798,346			2,854,860
	Cash paid for sale of undrawn portion of revolving credit facility		(1,837,500	)		—			—
	Amortization of purchase discount		(16,326,857	)		(10,030,920	)		—
	Realized gains on investments		(66,287,267	)		(37,128,956	)		—
	Net change in unrealized depreciation (appreciation) of investments		39,959,267			(68,143,411	)		1,435,127
	Non-cash interest		(3,374,086	)		(815,611	)		—
	Amortization of defferred credit facility costs		69,909			—			—
	Decrease (increase) in receivable from unsettled securities sold		5,124,622			(5,124,622	)		—
	Increase in interest receivable		(2,209,025	)		(770,292	)		(28,470	)
	Increase in other assets		(4,435	)		(1,407	)		—
	Increase (decrease) in payable for unsettled securities purchased		82,230,235			(19,082,935	)		31,315,200
	Increase in other liabilities		432,931			274,641			—
	(Decrease) increase in payable to affiliates		(190,500	)		392,679			—
	Increase in interest payable		340,503			472,689			—

Net cash flows provided by (used in) operating activities			29,051,309			(157,230,641	)		(31,343,618	)

Cash flows from financing activities
	Contributions		54,634,523			285,501,773			31,533,087
	Distributions		(115,940,206	)		(202,095,083	)		—
	Repayment of Debt Funding credit facility		(62,898,232	)		—			—
	Proceeds from Debt Funding credit facility		44,850,495			77,744,675			—
	Proceeds from SLF credit facility		56,936,000			—			—

Net cash flows (used in) provided by financing activities			(22,417,420	)		161,151,365			31,533,087

Net increase in cash and cash equivalents			6,633,889			3,920,724			189,469
Cash and cash equivalents at the beginning of the period			4,110,193			189,469			—

Cash and cash equivalents at the end of the period		$	10,744,082		$	4,110,193		$	189,469

Supplemental disclosure of cash flow information
	Interest paid	$	2,130,839		$	—		$	—
Non-cash financing activities:
	Accrual for deferred offering costs		3,528,110			—			—
	Accrual for deferred credit facility costs		1,950,029			—			—

The accompanying notes are an integral part of these combined financial statements.

F-31

NOTES TO THE COMBINED FINANCIAL STATEMENTS

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
As of and for the years ended December 31, 2010 and December 31, 2009 and the period October 29, 2008 (Commencement of Operations) to December 31, 2008

1. Formation and Business Purposes

2. Summary of Significant Accounting Policies

F-32

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P.
As of and for the years ended December 31, 2010 and December 31, 2009 and the period October 29, 2008 (Commencement of Operations) to December 31, 2008

2. Summary of Significant Accounting Policies (Continued)

realizations on portfolio investments reflected in the Combined Statements of Operations as "Realized gains on investments."

Management of the Combined Entities is responsible for determining the fair value of the investments.

Investment transactions are recorded on a trade date basis.

See Note 3,Investments, for further discussion relating to the Combined Entities' investments.

Revenue recognition — The Combined Entities' Revenue Recognition policies are as follows:

Sales and paydowns of investments: Realized gains and losses on investments are determined on the specific identification method.

Interest and other credit facility expenses — Interest and other credit facility fees are recorded on an accrual basis. See Note 8,Credit Facility, for details.

Income taxes — NMG (Leveraged), NMG DF, and NMG SLF are single member limited liability companies which are disregarded for federal, state, and local income tax purposes. The

F-33

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

2. Summary of Significant Accounting Policies (Continued)

assets, liabilities, investment income, and expenses of NMG (Leveraged), NMG DF, and NMG SLF are recorded on the federal and state income tax returns of NMG AIV, the ultimate sole owner.

The tax years from 2008 through the present of NMG AIV and the tax years from 2009 through the present for NMGP remain subject to examination by the U.S. Federal, state, and local tax authorities.

Cash and cash equivalents — The Combined Entities consider cash and cash equivalents to be cash and short-term, highly liquid investments with original maturities of three months or less.

Carried interest — Carried Interest is comprised of two amounts. First, amounts on unrealized appreciation and interest income are allocated to the General Partner of NMGP on the assumption that NMGP ceased operations on December 31, 2010 and liquidated its investments at the current valuation. In this hypothetical scenario the General Partner would be due these amounts on the distribution of proceeds raised from the liquidation. The second amount is any actual distribution of Carried Interest made during the reporting period.

The General Partner had received no distributions of carried interest as of December 31, 2010 or December 31, 2009. For the year ended December 31, 2010 and December 31, 2009, the General Partner was allocated $303,269 and $250,511 of Unrealized Carried Interest, respectively. NMG (Leveraged) does not have any allocations or payments of Carried Interest as it is structured as a limited liability company. Carried Interest is allocated to and paid from NMG AIV.

Foreign securities — The accounting records of the Combined Entities are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Combined Entities do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with "Net change in unrealized (depreciation) appreciation of investments" and "Realized gains on investments" in the Combined Statements of Operations.

Certain of the Combined Entities' investments are denominated in foreign currencies that may be negatively affected by movements in the rate of exchange between the United States dollar and

F-34

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

2. Summary of Significant Accounting Policies (Continued)

such foreign currencies. This movement is beyond the control of the Combined Entities and cannot be predicted.

Deferred credit facility costs — Deferred credit facility costs consist of fees related to loan origination costs in connection with the credit facility. See Note 8,Credit Facility, for details.

3. Investments

At December 31, 2010 investments consisted of the following:

Investment Cost and Fair Value by Type

	Cost		Fair Value

First lien	$	303,924,269	$	321,212,659
Second lien		90,027,745		98,934,554
Subordinated		19,812,335		20,377,764
Equity and other		544,474		532,863

Total investments	$	414,308,823	$	441,057,840

F-35

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

3. Investments (Continued)

Investment Cost and Fair Value by Industry

	Cost		Fair Value

Business Services	$	53,482,718	$	61,657,732
Consumer Services		24,665,157		25,173,367
Education		30,015,648		31,505,814
Energy		4,357,151		4,746,150
Federal Services		30,834,041		31,796,045
Franchises		9,091,224		9,285,114
Healthcare Facilities		3,063,441		3,594,136
Healthcare Information Technology		13,790,000		13,965,000
Healthcare Services		88,073,362		94,834,674
Industrial Services		10,245,116		10,425,950
Information Technology		4,854,762		4,280,423
Logistics		5,874,951		5,985,000
Media		11,820,000		11,880,000
Power Generation		8,580,242		7,803,431
Software		103,739,377		111,885,004
Telecommunication		11,821,633		12,240,000

Total investments	$	414,308,823	$	441,057,840

At December 31, 2009 investments consisted of the following:

Investment Cost and Fair Value by Type

	Cost		Fair Value

First lien	$	191,487,861	$	244,928,412
Second lien		46,453,560		53,255,320
Subordinated		15,872,943		22,338,916

Total investments	$	253,814,364	$	320,522,648

F-36

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

3. Investments (Continued)

Investment Cost and Fair Value by Industry

	Cost		Fair Value

Business Services	$	47,157,777	$	66,825,035
Consumer Products		6,266,503		6,165,622
Distribution		17,949,214		18,968,579
Education		18,914,671		24,091,452
Healthcare Facilities		19,752,390		23,851,572
Healthcare Products		6,139,037		15,317,464
Healthcare Services		38,042,665		45,866,415
Industrial Services		36,640,766		45,693,897
Information Technology		1,539,412		1,822,500
Maintenance services		3,859,285		4,008,468
Packaging		5,591,155		6,911,435
Power Generation		7,385,760		7,016,819
Software		44,575,729		53,983,390

Total investments	$	253,814,364	$	320,522,648

As of December 31, 2010 and December 31, 2009, there were no assets being accounted for on a non-accrual basis.

As of December 31, 2010 and December 31, 2009, the Combined Entities have unfunded commitments on revolving credit facilities of $12,198,500 and $27,198,500, respectively, which are disclosed on the Combined Schedules of Investments.

4. Fair Value

The hierarchy classifies the inputs used in measuring fair value as follows:

Level I — Quoted prices (unadjusted) are available in active markets for identical investments that the Combined Entities have the ability to access as of the reporting date. The type of investments which would generally be included in Level I include listed equity securities and listed derivatives. As required by ASC 820, the Combined Entities, to the extent that they hold such investments, do not adjust the quoted price for these investments, even in

F-37

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

4. Fair Value (Continued)

situations where the Combined Entities hold a large position and a sale could reasonably impact the quoted price.

The following table summarizes the levels in the fair value hierarchy that the Combined Entities' portfolio investments fall into as of December 31, 2010:

	Total		Level I		Level II		Level III

First lien	$	321,212,659	$	—	$	304,237,325	$	16,975,334
Second lien		98,934,554		—		98,934,554		—
Subordinated		20,377,764		—		7,630,000		12,747,764
Equity and other		532,863		—		—		532,863

Total investments	$	441,057,840	$	—	$	410,801,879	$	30,255,961

The following table summarizes the levels in the fair value hierarchy that the Combined Entities' portfolio investments fall into as of December 31, 2009:

	Total		Level I		Level II		Level III

First lien	$	244,928,412	$	—	$	244,928,412	$	—
Second lien		53,255,320		—		53,255,320		—
Subordinated		22,338,916		—		22,338,916		—

Total investments	$	320,522,648	$	—	$	320,522,648	$	—

The following table summarizes the changes in fair value of Level III portfolio investments for the year ended December 31, 2010, as well as the portion of appreciation (depreciation) included in

F-38

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

4. Fair Value (Continued)

income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held at December 31, 2010:

		Total			First Lien			Subordinated		Equity and other

Fair value, December 31, 2009		$	—		$	—		$	—	$	—
Total gains or losses included in earnings:
	Net change in unrealized appreciation (depreciation)		146,416			157,678			349		(11,611	)
Purchases, including capitalized PIK(1)(2)			30,349,545			17,057,656			12,747,415		544,474
Transfers into Level III(3)			(240,000	)		(240,000	)		—		—

Fair value, December 31, 2010		$	30,255,961		$	16,975,334		$	12,747,764	$	532,863

Unrealized appreciation (depreciation) for the period relating to those Level III assets that were still held by the Combined Entities at the end of the period:		$	146,416		$	157,678		$	349	$	(11,611	)

(1): Includes net amortization of purchase discounts or premiums of approximately $184,263, $36,603, and $147,660, and $0, respectively.
(2): The purchases in the table above include the purchase of PODS Holding Funding Corp. at a cost of $8,433,541. In accordance with the Combined Entities' valuation policy, this asset was transferred from a Level II investment to a Level III investment during the three months ended September 30, 2010.
(3): The transfer into Level III in the table above represents the transfer of Education Management Corporation at a fair value of ($240,000). In accordance with the Combined Entities' valuation policy, this asset was transferred from a Level II investment to a Level III investment during the three months ended December 31, 2010.

There were no investments classified as Level III as of December 31, 2009.

F-39

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

4. Fair Value (Continued)

Also, there may be risk associated with the concentration of investments in one geographic region or in certain industries.

The above events are beyond the control of the Combined Entities and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.

5. Allocations of Distributions and Profits and Losses

6. Management of the Combined Entities

NMG (Leveraged) has appointed New Mountain Capital, L.L.C. ("New Mountain Capital") and NMGP has appointed New Mountain Guardian Advisers, L.L.C. ("New Mountain Guardian Advisers") as the investment advisers and Managers of the Combined Entities. A Management Fee is not charged to NMG (Leveraged), as it is paid to New Mountain Capital by NMP III. A Management Fee is paid by NMGP to New Mountain Guardian Advisers in semi-annual installments on January 1 and July 1 of each year (the "Payment Date"). During the Investment Period, the Management Fee is equal to 0.875% per annum of Capital Commitments of NMGP Cayman and, thereafter, is equal to 0.5% per annum of the Actively Invested Capital of NMGP Cayman as of the relevant Payment Date. The Management Fee is reduced, but not below zero, by (a) Placement fees paid by NMGP Cayman since the preceding Payment Date; (b) 65% of the break-up, transaction and/or monitoring fees received in the preceding year by the Manager and (c) NMGP's share of organization costs paid in excess of $1 million. Gross management fee for the year ended December 31, 2010 of $175,000 was reduced by $104,001 relating to transaction fees. Gross management fee of $134,966 was charged for the year ended December 31, 2009. There was no reduction related to transaction fees.

7. Related Parties

Payable to affiliates represents amounts payable to New Mountain Capital for amounts paid on behalf of the Combined Entities.

8. Credit Facility

Debt Funding Credit Facility:

The Loan and Security Agreement dated October 21, 2009 among NMG (Leveraged) as the Collateral Manager, NMG DF as the borrower, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 21, 2014. The maximum amount of revolving borrowings available under the credit facility is $112,500,000. The outstanding balance of this facility as of December 31, 2010 and December 31, 2009 was $59,696,938 and $75,778,584, respectively. The credit facility is collateralized by the investments of NMG DF on an investment by investment

F-40

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

8. Credit Facility (Continued)

basis, totaling $215,393,015 as of December 31, 2010 and $227,183,693 as of December 31, 2009. NMG DF was in compliance with all of its debt covenants as of December 31, 2010 and December 31, 2009.

The Loan and Security Agreement dated November 19, 2009 among NMGP Leveraged as the Collateral Manager, NMGP DF as the borrower, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 21, 2014. The maximum amount of revolving borrowings available under this credit facility is $7,500,000. There was no outstanding balance of this facility as of December 31, 2010. The outstanding balance as of December 31, 2009 was $1,966,091. The credit facility is collateralized by the investments of NMGP DF on an investment by investment basis, totaling $12,081,913 as of December 31, 2010 and $5,279,445 as of December 31, 2009. NMGP DF was in compliance with all of its debt covenants as of December 31, 2010 and December 31, 2009.

The credit facilities of NMG DF and NMGP DF (together, the "Debt Funding Credit Facility") bear interest at a rate of LIBOR plus 3.00% per annum. A commitment fee is also paid, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the credit agreement). Interest expense and commitment fees were $2,248,078 and $320,848, respectively, on a combined basis for the year ended December 31, 2010. Interest expense and commitment fees were $420,723 and $51,966, respectively, on a combined basis for the year ended December 31, 2009. The weighted average interest rate for the year ended December 31, 2010 for each facility was 3.3%. The weighted average interest rate for the year ended December 31, 2009 for each facility was 3.2%.

SLF Credit Facility:

The Loan and Security Agreement dated October 27, 2010 among NMG SLF as the borrower, NMG (Leveraged) as the Collateral Administrator, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 27, 2015. The maximum amount of revolving borrowings available under the credit facility is $93,750,000. The outstanding balance of this facility as of December 31, 2010 was $53,312,360. The loan is non-recourse to NMG (Leveraged) and secured by all assets owned by the borrower, which includes the investments of NMG SLF totaling $161,548,326 as of December 31, 2010. NMG SLF was in compliance with all of its debt covenants as of December 31, 2010.

F-41

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

8. Credit Facility (Continued)

The Loan and Security Agreement dated October 27, 2010 among NMGP (Leveraged) as the Collateral Administrator, NMGP SLF as the borrower, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, is structured as a revolving credit facility and matures on October 27, 2015. The maximum amount of revolving borrowings available under this credit facility is $6,250,000. The outstanding balance of this facility as of December 31, 2010 was $3,623,640. The loan is non-recourse to NMGP and secured by all assets owned by the borrower, which includes the investments of NMGP SLF totaling $10,985,286 as of December 31, 2010. NMGP SLF was in compliance with all of its debt covenants as of December 31, 2010.

The credit facilities of NMG SLF and NMGP SLF (together, the "SLF Credit Facility") permit borrowings of up to 67.0% of the purchase price of pledged debt securities subject to approval by Wells Fargo Bank, N.A. and bear interest at a rate of LIBOR plus 2.25% per annum. A commitment fee is paid, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the credit agreement). For the period October 7, 2010 (commencement of SLF operations) through December 31, 2010, interest expense and commitment fees for the SLF Credit Facility were $127,325 and $66,301, respectively, on a combined basis. The weighted average interest rate for the period October 7, 2010 (commencement of SLF operations) through December 31, 2010 for each facility was 2.5%.

9. Commitments and Contingencies

In the normal course of business, the Combined Entities enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. In addition, under the terms of the LLC Agreement and limited partnership agreement, the Combined Entities have agreed to indemnify Management, its officers, directors, employees, agents or any person who serves on behalf of the Combined Entities from any loss, claim, damage, or liability which such person incurs by reason of performance of activities of the Combined Entities, provided they acted in good faith. Based on experience, Management expects the risk of loss related to the Combined Entities' indemnifications to be remote.

The Combined Entities have unfunded commitments on revolving credit facilities, which are disclosed on the Combined Schedules of Investments and in Note 3,Investments.

The Combined Entities may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. As of December 31, 2010, the Combined Entities had no outstanding bridge financing commitments.

The Combined Entities have revolving borrowings available under credit facilities. See Note 8,Credit Facility, for details.

10. Financial Highlights

Financial highlights are calculated for the Combined Entities as a whole. The total return is the ratio of net increase (decrease) in capital resulting from operations compared to capital, adjusted

F-42

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

10. Financial Highlights (Continued)

for average capital contributions and distributions. Total return from commencement of operations through December 31, 2008 was deemed not meaningful due to the scaling of operations during this short time period.


Total Return for the year ended December 31, 2010	27	%
Total Return for the year ended December 31, 2009	76	%

Ratios to Average Capital for the year ended December 31, 2010:


Expenses, excluding carried interest		1.6	%
Carried interest		0.1	%

	Total expenses and carried interest	1.7	%

Net investment income		15.2	%

Ratios to Average Capital for the year ended December 31, 2009:


Expenses, excluding carried interest		0.7	%
Carried interest		0.1	%

	Total expenses and carried interest	0.8	%

Net investment income		10.4	%

Ratios to Average Capital from October 29, 2008 to December 31, 2008:


Expenses, excluding carried interest		0.0	%
Carried interest		0.0	%

	Total expenses and carried interest	0.0	%

Net investment income (annualized)		9.4	%

11. Recent Accounting Standards Updates

In January 2010, the FASB issued Accounting Standards Update No. 2010-06 ("ASU 2010-06"),Improving Disclosures about Fair Value Measurements, which, among other things, amends ASC 820 to require entities to separately present purchases, sales, issuances, and settlements in their reconciliation of Level 3 fair value measurements (i.e., to present such items on a gross basis rather than on a net basis), and which clarifies existing disclosure requirements provided by ASC 820 regarding the level of disaggregation and the inputs and valuation techniques used to measure fair value for measurements that fall within either Level 2 or Level 3 of the fair value hierarchy. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements (which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years). The adoption on January 1, 2010 of the applicable additional disclosure requirements of ASU 2010-06 did not materially impact the Combined Entities' combined financial statements. Management is currently

F-43

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

11. Recent Accounting Standards Updates (Continued)

assessing the impact that the adoption of the additional disclosure requirements, which will be effective in 2011, will have on the Combined Entities' combined financial statement disclosures.

12. Restatement of the Audited Combined Financial Statements

Due to recent regulatory interpretations of the consolidation guidance, the December 31, 2010 financial statements of the Combined Entities have been restated to reflect the consolidation of NMG SLF and NMGP SLF (together, "SLF"). The Combined Entities' previously reported financial statements reflected SLF as an equity investment on the Statement of Assets, Liabilities, and Capital with any changes in the fair value of the SLF flowing through net change in unrealized (depreciation) appreciation of investments. Management considers this an immaterial restatement as the Combined Entities' filing of Form N-2 on February 28, 2011 included full disclosure of SLF as well as the full combined financial statements and notes of SLF within the filing. Users had sufficient information to prevent the lack of consolidation of SLF from being materially misleading.

The following tables detail the impact of the restatement on each line item of the financial statements of the Combined Entities. Although not shown in this note, the restated New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P. Combined Schedule of Investments reflects the individual investments of SLF.

F-44

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

12. Restatement of the Audited Combined Financial Statements (Continued)

Combined Statement of Assets, Liabilities, and Capital

As of December 31, 2010

		As Previously Reported		Adjustments			As Restated

Assets
	Non-controlled/non-affiliated investments, at value	$	268,524,228	$	172,533,612		$	441,057,840
	Controlled investment, at value		72,195,541		(72,195,541	)		—
	Cash and cash equivalents		9,476,754		1,267,328			10,744,082
	Deferred offering costs		3,528,110		—			3,528,110
	Interest receivable		2,420,746		587,041			3,007,787
	Receivable from affiliate		191,065		(191,065	)		—
	Deferred credit facility costs		14,804		1,865,316			1,880,120
	Other assets		4,951		891			5,842

	Total assets	$	356,356,199	$	103,867,582		$	460,223,781

Liabilities
	Debt Funding Credit Facility	$	59,696,938	$	—		$	59,696,938
	SLF Credit Facility		—		56,936,000			56,936,000
	Payable for unsettled securities purchased		26,460,000		68,002,500			94,462,500
	Payable for controlled investment		26,018,000		(26,018,000	)		—
	Other liabilities		3,813,764		42,807			3,856,571
	Interest payable		619,566		193,626			813,192
	Payable to affiliates		593,167		1,938,152			2,531,319

	Total liabilities		117,201,435		101,095,085			218,296,520
Capital			239,154,764		2,772,497			241,927,261

	Total liabilities and capital	$	356,356,199	$	103,867,582		$	460,223,781

F-45

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

12. Restatement of the Audited Combined Financial Statements (Continued)

Combined Statement of Operations

For the year ended December 31, 2010

			As Previously Reported			Adjustments			As Restated

Investment income
	From non-controlled/non-affiliated investments:
		Interest income	$	39,577,719		$	907,439		$	40,485,158
		Other income		850,128			39,491			889,619
	From controlled investments:
		Other income		191,065			(191,065	)		—

	Total investment income			40,618,912			755,865			41,374,777

Expenses
	Interest and other credit facility expenses			2,668,926			279,534			2,948,460
	Other general and administrative expenses			559,882			3,844			563,726
	Professional fees			302,331			25,000			327,331
	Management fee, net			70,999			—			70,999

	Total expenses			3,602,138			308,378			3,910,516

	Net investment income			37,016,774			447,487			37,464,261
	Realized gains on investments			66,276,066			11,201			66,287,267
	Net change in unrealized (depreciation) appreciation of investments			(42,273,076	)		2,313,809			(39,959,267	)

	Net increase (decrease) in capital resulting from operations		$	61,019,764		$	2,772,497		$	63,792,261

F-46

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

12. Restatement of the Audited Combined Financial Statements (Continued)

Combined Statement of Changes in Capital

For the year ended December 31, 2010

			As Previously Reported			Adjustments		As Restated

Increase (Decrease) in net assets resulting from operations:
	Net investment income		$	37,016,774		$	447,487	$	37,464,261
	Realized gains on investments			66,276,066			11,201		66,287,267
	Net change in unrealized (depreciation) appreciation of investments			(42,273,076	)		2,313,809		(39,959,267	)

		Net increase (decrease) in net assets resulting from operations		61,019,764			2,772,497		63,792,261
Distributions				(115,940,206	)		—		(115,940,206	)
Contributions				54,634,523			—		54,634,523

		Net (decrease) increase in net assets		(285,919	)		2,772,497		2,486,578
Capital at beginning of period				239,440,683			—		239,440,683

Capital at end of period			$	239,154,764		$	2,772,497	$	241,927,261

F-47

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

12. Restatement of the Audited Combined Financial Statements (Continued)

Combined Statement of Cash Flows

For the year ended December 31, 2010

			As Previously Reported			Adjustments			As Restated

Cash flows from operating activities
Net increase (decrease) in capital resulting from operations			$	61,019,764		$	2,772,497		$	63,792,261
Adjustments to reconcile net decrease in capital resulting from operations to net cash provided by (used in) operating activities:
		Purchase of investments		(233,095,778	)		(99,612,500	)		(332,708,278	)
		Proceeds from sales and paydowns of investments		258,412,237			1,627,292			260,039,529
		Cash paid for sale of undrawn portion of revolving credit facility		(1,837,500	)		—			(1,837,500	)
		Amortization of purchase discount		(16,299,004	)		(27,853	)		(16,326,857	)
		Realized gains on investments		(66,276,066	)		(11,201	)		(66,287,267	)
		Net change in unrealized depreciation (appreciation) of investments		42,273,076			(2,313,809	)		39,959,267
		Non-cash interest		(3,374,086	)		—			(3,374,086	)
		Amortization of deferred credit facility costs		—			69,909			69,909
		Decrease (increase) in receivable from unsettled securities sold		5,124,622			—			5,124,622
		Increase in interest receivable		(1,621,984	)		(587,041	)		(2,209,025	)
		Increase in receivable from affiliate		(191,065	)		191,065			—
		Increase in other assets		(3,544	)		(891	)		(4,435	)
		Increase (decrease) in payable for unsettled securities purchased		14,227,735			68,002,500			82,230,235
		Increase in payable for controlled investment		26,018,000			(26,018,000	)		—
		Increase in interest payable		146,877			193,626			340,503
		(Decrease) increase in payable to affiliates		(193,426	)		2,926			(190,500	)
		Increase in other liabilities		390,123			42,808			432,931

Net cash flows provided by (used in) operating activities				84,719,981			(55,668,672	)		29,051,309

Cash flows from financing activities
	Contributions			54,634,523			—			54,634,523
	Distributions			(115,940,206	)		—			(115,940,206	)
	Repayment of Debt Funing Credit Facility			(62,898,232	)		—			(62,898,232	)
	Proceeds from Debt Funding Credit Facility			44,850,495			—			44,850,495
	Proceeds from SLF Credit Facility			—			56,936,000			56,936,000

Net cash flows (used in) provided by financing activities				(79,353,420	)		56,936,000			(22,417,420	)

Net increase in cash and cash equivalents				5,366,561			1,267,328			6,633,889
Cash and cash equivalents at the beginning of the period				4,110,193			—			4,110,193

Cash and cash equivalents at the end of the period			$	9,476,754		$	1,267,328		$	10,744,082

Supplemental disclosure of cash flow information
	Interest paid		$	2,130,839		$	—		$	2,130,839
Non-cash operating activities:
	Investments contributed to SLF		$	21,450,541		$	(21,450,541	)	$	—
Non-cash financing activities:
	Accrual for deferred offering costs			3,528,110			—			3,528,110
	Accrual for deferred credit facility costs			14,804			1,935,225			1,950,029

F-48

NOTES TO THE COMBINED FINANCIAL STATEMENTS — (Continued)

13. Subsequent Events

The Combined Entities have evaluated subsequent events through March 28, 2011, which is the date that these combined financial statements were available to be issued. The following subsequent event was noted.

A Second Amendment to the Loan and Security Agreements among the NMG SLF and NMGP SLF as the borrowers, Wells Fargo Securities, L.L.C. as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian was executed on March 9, 2011. These amendments increased the maximum amount of revolving borrowings available under the NMG SLF and NMGP SLF credit facilities to $140,625,000 and $9,375,000, respectively.

F-49

New Mountain Finance AIV Inactive 10-12GRegistration of securities