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 years ended December 31, 2018, 2017, and 2016.

During each of the years ended December 31, 2018, 2017, and 2016, the Company recognized expense under the Management Consulting Agreement of $3. This amount is included in “Other operating expense, net” in the Company’s 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 provided to MPM, and MPM provided 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 established 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, subject to termination rights of each of the Company or MPM, without cause, on not less than 30 days’ written notice.

On February 11, 2019, MPM provided notice of its intention to terminate the Shared Services Agreement, effective March 14, 2019. The termination triggers a period of up to 14 months during which time the parties will work together to facilitate an orderly transition of services provided under the Shared Services Agreement.

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



	Year Ended December 31,
	2018		2017		2016
Total cost pool - Hexion ⁽¹⁾	$	28	$	48	$	63
Total cost pool - MPM ⁽¹⁾	21		38		50

(1) Included in the cost pools during the years ended December 31, 2018, 2017, and 2016, were net billings from Hexion to MPM of $14, $26, and $30, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable agreed upon allocation. The allocation percentages for Hexion and MPM, respectively, were 57% and 43% in 2018 and 56% and 44% in 2017 and 2016. The scope of services and allocation percentages are reviewed by the Steering Committee pursuant to the terms of the Shared Services Agreement.



	Year Ended December 31,
	2018		2017
Accounts receivable from MPM	$	2	$	3

Sales and Purchases of Products and Services with MPM

The Company also sells products to, and purchases products from, MPM. During each of the years ended December 31, 2018, 2017 and 2016, the Company sold less than $1 of products to MPM. During the years ended December 31, 2018, 2017, and 2016, the Company earned $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:



	Year ended December 31,
	2018		2017		2016
Purchases from MPM	$	32	$	24	$	27



	Year ended December 31,
	2018		2017
Accounts payable to MPM	$	3	$	2

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

The Company sells products to and purchases raw materials and services from various Apollo affiliates other than MPM. These sales were $2, $4, and $6 for the years ended December 31, 2018, 2017, and 2016. Accounts receivable from these affiliates were less than $1 at both December 31, 2018 and 2017. There were no purchases for the years ended December 31, 2018 and 2017 and purchases of less than $1 for the year ended December 31, 2016. The Company had no accounts payable to these affiliates at December 31, 2018 and 2017.

Other Transactions and Arrangements

The Company sells products and provides services to, and purchases products from, its other 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:



	Year ended December 31,
	2018		2017		2016
Sales to joint ventures	$	9	$	17	$	43
Purchases from joint ventures	6		14		17



	Year ended December 31,
	2018		2017
Accounts receivable from joint ventures	$	2	$	6
Accounts payable to joint ventures	<1		1

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