Related Party Transactions

Administrative Service, Management and Consulting Arrangement

The Company is subject to a Management Consulting Agreement with Apollo (the “Management Consulting Agreement”) that renews on an annual basis, unless notice to the contrary is given by either party. Under the Management Consulting Agreement, the Company receives certain structuring and advisory services from Apollo and its affiliates. The Management Consulting Agreement provides indemnification to Apollo, its affiliates and their directors, officers and representatives for potential losses arising from these services. Apollo is entitled to an annual fee equal to the greater of $3 or 2% of the Company’s Adjusted EBITDA. Apollo elected to waive charges of any portion of the annual management fee due in excess of $3 for the calendar year 2018 and 2017.

During the three and nine months ended September 30, 2018 and 2017, the Company recognized expense under the Management Consulting Agreement of $1 and $2, respectively. This amount is included in “Other operating expense, net” in the unaudited Condensed Consolidated Statements of Operations.

Transactions with MPM

Shared Services Agreement

On October 1, 2010, the Company entered into a shared services agreement with Momentive Performance Materials Inc. (“MPM”) (which, from October 1, 2010 through October 24, 2014, was a subsidiary of Hexion Holdings), as amended in October 2014 (the “Shared Services Agreement”). Under this agreement, the Company provides to MPM, and MPM provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, legal and procurement services. The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and MPM. The Shared Services Agreement was renewed for one year starting October 2018 and is subject to termination by either the Company or MPM, without cause, on not less than 30 days’ written notice, and expires in October 2019 (subject to one-year renewals every year thereafter; absent contrary notice from either party). The Company periodically reviews the scope of services provided under this agreement.

Pursuant to the Shared Services Agreement, the below table summarizes the transactions between the Company and MPM:



	Nine Months Ended September 30,
	2018		2017
Total cost pool - Hexion ⁽¹⁾	$	23	$	41
Total cost pool - MPM ⁽¹⁾	17		31

(1) Included in the net costs incurred during the nine months ended September 30, 2018 and 2017, were net billings from Hexion to MPM of $11 and $21, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable agreed upon allocation percentage.



	September 30, 2018		December 31, 2017
Accounts receivable from MPM	$	1	$	3

Sales and Purchases of Products with MPM

The Company also sells products to, and purchases products from, MPM. There were no products sold during the three months ended September 30, 2018 and during the three months ended September 30, 2017, the Company sold less than $1 of products to MPM. During the nine months ended September 30, 2018 and 2017, the Company sold less than $1 of products to MPM. During the three and nine months ended September 30, 2018 and 2017, the company earned less than $1 from MPM as compensation for acting as distributor of products. Refer to the below table for the summary of the purchases of products with MPM:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Purchases from MPM	$	9	$	6	$	25	$	18



	September 30, 2018		December 31, 2017
Accounts payable to MPM	$	3	$	2

Purchases and Sales of Products and Services with Apollo Affiliates Other than MPM

The Company sells products to various Apollo affiliates other than MPM. These sales were $1 for both the three months ended September 30, 2018 and September 30, 2017 and $2 and $3 for the nine months ended September 30, 2018 and 2017, respectively. Accounts receivable from these affiliates were less than $1 at both September 30, 2018 and December 31, 2017.

Other Transactions and Arrangements

The Company sells products and provides services to, and purchases products from, its joint ventures which are recorded under the equity method of accounting. Refer to the below table for a summary of the sales and purchases with the Company and its joint ventures which are recorded under the equity method of accounting:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Sales to joint ventures	$	1	$	1	$	7	$	9
Purchases from joint ventures	< 1		3		5		10



	September 30, 2018		December 31, 2017
Accounts receivable from joint ventures	$	3	$	6
Accounts payable to joint ventures	< 1		1

In addition to the accounts receivable from joint ventures disclosed above, the Company had a loan receivable of $7 and $6 as of September 30, 2018 and December 31, 2017, respectively, from its unconsolidated forest products joint venture in Russia.