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.

During the three months ended March 31, 2019 and 2018, the Company recognized expense under the Management Consulting Agreement of $1. This amount is included in “Other operating expense, net” in the unaudited Condensed Consolidated Statements of Operations. In conjunction with the Company’s Chapter 11 proceedings and the Support Agreement filed on April 1, 2019, Apollo has agreed to waive its annual management fee for 2019. In addition, as part of the Support Agreement, Apollo will receive a $2.5 senior unsecured note maturing on March 31, 2020, payable upon an initial public offering or listing on NYSE or NASDAQ.

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.

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:



	Three Months Ended March 31,
	2019		2018
Total cost pool - Hexion ⁽¹⁾	$	6	$	8
Total cost pool - MPM ⁽¹⁾	5		7

(1) Included in the net costs incurred during the three months ended March 31, 2019 and 2018, were net billings from Hexion to MPM of $3 to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable agreed upon allocation percentage.



	March 31, 2019		December 31, 2018
Accounts receivable from MPM	$	2	$	2

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 March 31, 2019 and during the three months ended March 31, 2018, the Company sold less than $1 of products to MPM. During the three months ended March 31, 2019 and 2018, 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 March 31,
	2019		2018
Purchases from MPM	$	7	$	7



	March 31, 2019		December 31, 2018
Accounts payable to MPM	$	3	$	3

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 March 31, 2019 and March 31, 2018. Accounts receivable from these affiliates were $1 and less than $1 at March 31, 2019 and December 31, 2018, respectively.

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 March 31,
	2019		2018
Sales to joint ventures	$	1	$	3
Purchases from joint ventures	1		2



	March 31, 2019		December 31, 2018
Accounts receivable from joint ventures	$	3	$	2
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 $8 and $7 as of March 31, 2019 and December 31, 2018, respectively, from its unconsolidated forest products joint venture in Russia.