GUARANTEE AGREEMENT

Exhibit 10.2

GUARANTEE AGREEMENT

dated and effective as of

December 4, 2006

among

MOMENTIVE PERFORMANCE MATERIALS HOLDINGS INC.,

MOMENTIVE PERFORMANCE MATERIALS INC.

MOMENTIVE PERFORMANCE MATERIALS USA INC.,

BLITZ 06-103 GMBH,

each of the Subsidiary Loan Parties identified herein,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

TABLE OF CONTENTS

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GUARANTEE AGREEMENT dated and effective as of December 4, 2006 (this “ Agreement ”), among MOMENTIVE PERFORMANCE MATERIALS HOLDINGS INC., a Delaware corporation (“ Holdings ”), MOMENTIVE PERFORMANCE MATERIALS INC., a Delaware corporation (“ Intermediate Holdings ”), MOMENTIVE PERFORMANCE MATERIALS USA INC., a Delaware corporation (the “ U.S. Borrower ”), BLITZ 06-103 GMBH, a company organized under the laws of Germany (the “ German Borrower ” and together with the U.S. Borrower, the “ Borrowers ”), each Subsidiary of Intermediate Holdings identified herein as a party and JPMORGAN CHASE BANK, N.A. (“ JPMorgan ”), as administrative agent and collateral agent (in such capacities, the “ Administrative Agent ”) for the Secured Parties (as defined below).

PRELIMINARY STATEMENT

Reference is made to the Credit Agreement dated as of December 4, 2006 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”), among Holdings, Intermediate Holdings, the Borrowers, the Lenders party thereto from time to time, JPMorgan, as administrative agent and collateral agent for the Lenders, and General Electric Capital Corporation and UBS Loan Finance LLC, as co-syndication agents.

The Lenders and the Issuing Banks have agreed to extend credit to the Borrowers subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders and the Issuing Banks to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Subsidiary Loan Parties are affiliates of the Borrowers, will derive substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders and the Issuing Banks to extend such credit.

Now therefore, in consideration of the mutual covenants and agreements of the parties and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Credit Agreement . (a) Capitalized terms used in this Agreement and not otherwise defined herein have the respective meanings assigned thereto in the Credit Agreement.

(b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

“ Additional Secured Party ” means any Affiliate of a Lender, any Affiliate of the Administrative Agent or any other financial institution reasonably acceptable to the Administrative Agent, in each case that is a provider of Cash Management Services or the Overdraft Line and to which any obligation referred to in clause (c) or (d) of the definition of the term “Obligations” is owed.

“ Borrowers ” has the meaning assigned to such term in the introductory paragraph of this Agreement.

“ Canadian Guarantor ” means any of the Guarantors designated as such on Schedule I and any party entering into this Agreement as a Guarantor after the date hereof that is incorporated in and existing in Canada or any political subdivision thereof.

“ Cash Management Services ” means any cash management services (including, but not limited to, intraday, ACH and purchasing card/T&E services) that are (i) in effect on the Closing Date with a counterparty that is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent as of the Closing Date or (ii) entered into after the Closing Date with any counterparty that is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent at the time such services are entered into.

“ Collateral ” means, collectively, the Collateral defined in each of the Collateral Agreements.

“ Credit Agreement ” has the meaning assigned to such term in the preliminary statement of this Agreement.

“ Dutch Guarantor ” means any party entering into this Agreement as a Guarantor after the date hereof that is incorporated in and existing in the Netherlands.

“ Foreign Guarantor ” means any Guarantor that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any State thereof or the District of Columbia.

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“ German Guarantors ” means the Guarantors designated as such on Schedule I and any party entering into this Agreement as a Guarantor after the date hereof that is incorporated in and existing in Germany.

“ Guaranteed Obligations ” means:

(i) in the case of the German Borrower, the Obligations of the Foreign Subsidiaries in respect of Guaranteed Swap Agreements, Cash Management Services and the Overdraft Line;

(ii) in the case of the Foreign Guarantors (other than the German Borrower), (A) the Obligations of the German Borrower and (B) the Obligations of the Foreign Subsidiaries in respect of Guaranteed Swap Agreements, Cash Management Services and the Overdraft Line;

(iii) in the case of the U.S. Borrower, (A) the Obligations of the German Borrower and (B) the Obligations of the other Loan Parties and the other Subsidiaries in respect of Guaranteed Swap Agreements, Cash Management Services and the Overdraft Line; and

(iv) in the case of the US Guarantors (other than the U.S. Borrower), (A) the Obligations of the Borrowers and (B) the Obligations of the Loan Parties and the other Subsidiaries in respect of Guaranteed Swap Agreements, Cash Management Services and the Overdraft Line.

“ Guarantors ” means Holdings, Intermediate Holdings, the Borrowers and each of the Subsidiary Loan Parties set forth on Schedule I and any additional Subsidiary Loan Party that becomes a party hereto pursuant to Section 4.14.

“ Loan Document Obligations ” means (a) the due and punctual payment by each of the Borrowers of (i) the unpaid principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans made to the Borrowers, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any of the Borrowers under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide cash collateral and (iii) all other monetary obligations of the Borrowers to any of the Secured Parties under the Credit Agreement and each of the other Loan Documents, including obligations to pay fees, expenses and reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding)

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and (b) the due and punctual payment of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents.

“ Obligations ” means (a) the Loan Document Obligations, (b) the due and punctual payment of all obligations of each Loan Party and each other Subsidiary under each Guaranteed Swap Agreement, (c) the due and punctual payment of all obligations of each Loan Party and each other Subsidiary under any Cash Management Services and (d) the due and punctual payment of all obligations in respect of the Overdraft Line most recently identified in writing by Intermediate Holdings to the Administrative Agent; provided that in no event shall the holders of any obligations under the Overdraft Line have the right to receive proceeds in respect of a claim in excess of $25.0 million in the aggregate (plus (A) any accrued and unpaid interest in respect of Indebtedness incurred by Intermediate Holdings or any Subsidiary under the Overdraft Line and (B) any accrued and unpaid fees and expenses owing by Intermediate Holdings or any Subsidiary under the Overdraft Line).

“ Secured Parties ” means (a) the Lenders ,the Administrative Agent and the Additional Secured Parties, (b) each Issuing Bank, (c) each counterparty to any Guaranteed Swap Agreement, the obligations under which constitute Obligations, (d) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (e) the successors and permitted assigns of each of the foregoing.

“ Subsidiary Loan Party ” means each Subsidiary set forth on Schedule I, and any Subsidiary that becomes a party hereto pursuant to Section 4.14.

“ Supplement ” has the meaning assigned to such term in Section 4.14.

“ Swiss Guarantors ” means the Guarantors designated as such on Schedule I and any party entering into this Agreement as a Guarantor after the date hereof that is incorporated in and existing in Switzerland.

“ US Guarantors ” means the Guarantors designated as such on Schedule I and any party entering into this Agreement as a Guarantor after the date hereof that is incorporated in and existing in the United States of America, any State thereof or the District of Columbia.

ARTICLE II

Guarantee

SECTION 2.01. Guarantee . Each Guarantor unconditionally and irrevocably guarantees, jointly with the other Guarantors and severally, to the Administrative Agent, for the ratable benefit of the Secured Parties, as a primary obligor and not merely as a surety, the due and punctual payment of its Guaranteed Obligations. Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any

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Guaranteed Obligation. Each Guarantor waives presentment to, demand of payment from and protest to any Borrower or any other Loan Party of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 2.02. Guarantee of Payment . Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether at the stated maturity, by acceleration or otherwise) and not of collection, and waives any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of any Borrower or any other person.

SECTION 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s obligations hereunder as expressly provided for in Section 4.13 and except for the limitations set forth in Section 2.07 or, with respect to any Subsidiary Loan Party that becomes a party hereto pursuant to Section 4.14 or otherwise, in any Supplement to this Agreement, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise (other than defense of payment or performance). Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder, to the fullest extent permitted by applicable law, shall not be discharged or impaired or otherwise affected by, and each Guarantor hereby waives any defense to the enforcement hereof by reason of:

(i) the failure of the Administrative Agent or any other Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise;

(ii) any rescission, waiver, amendment or modification of, increase in the Guaranteed Obligations with respect to, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement;

(iii) the failure to perfect any security interest in, or the exchange, substitution, release or any impairment of, any security held by the Administrative Agent or any other Secured Party for the Guaranteed Obligations;

(iv) any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations;

(v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge

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of any Guarantor as a matter of law or equity (other than the payment in full in cash or immediately available funds of all the Guaranteed Obligations);

(vi) any illegality, lack of validity or enforceability of any Guaranteed Obligation;

(vii) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting a Loan Party or its assets or any resulting release or discharge of any Guaranteed Obligation;

(viii) the existence of any claim, set-off or other rights that the Guarantor may have at any time against any Borrower, the Administrative Agent, or any other corporation or person, whether in connection herewith or any unrelated transactions, provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim;

(ix) any action permitted or authorized hereunder; or

(x) any other circumstance (including without limitation, any statute of limitations) or any existence of or reliance on any representation by the Administrative Agent that might otherwise constitute a defense to, or a legal or equitable discharge of, any Borrower or the Guarantor or any other guarantor or surety.

Each Guarantor expressly authorizes the Secured Parties to take and hold security for the payment and performance of the Guaranteed Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Guaranteed Obligations, all without affecting the obligations of any Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party, other than the payment in full in cash or immediately available funds of all the Guaranteed Obligations (other than contingent or unliquidated obligations or liabilities). The Administrative Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any other Loan Party or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations (other than contingent or unliquidated obligations or liabilities) have been paid in full in cash or immediately available funds. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such

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election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any other Loan Party, as the case may be, or any security.

SECTION 2.04. Reinstatement . Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored by the Administrative Agent or any other Secured Party upon the bankruptcy or reorganization of any Borrower or any other Loan Party or otherwise.

SECTION 2.05. Agreement To Pay; Contribution; Subrogation . In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of any Borrower or any other Loan Party to pay any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Guaranteed Obligation. Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this guarantee, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents. Upon payment by any Guarantor of any sums to the Administrative Agent as provided above, all rights of such Guarantor against the applicable Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article III.

SECTION 2.06. Information . Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition and assets of each of the Borrowers and each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Administrative Agent or the other Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

SECTION 2.07. Maximum Liability . (a) Each US Guarantor, and by its acceptance of this guarantee, the Administrative Agent and each Lender hereby confirms that it is the intention of all such Persons that this guarantee and the Guaranteed Obligations of each US Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the U.S. Bankruptcy Code or any other federal, state or non-U.S. bankruptcy, insolvency, receivership or similar law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or non-U.S. law to the extent applicable to this guarantee and the Guaranteed Obligations of each US Guarantor hereunder. To effectuate the foregoing intention, the Administrative Agent, the Lenders and the US Guarantors hereby irrevocably agree that the Obligations

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of each US Guarantor under this guarantee at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of such US Guarantor under this guarantee not constituting a fraudulent transfer or conveyance.

(b) In respect of any German Guarantor incorporated as a GmbH or GmbH & Co KG under the laws of the Federal Republic of Germany (the “ Relevant German Guarantor ” ), the Administrative Agent agrees to enforce the guarantee provided hereunder (the “ Guarantee ”) in accordance with this clause (b) only.

(i) If and to the extent that the Guarantee secures obligations (A) which are owed by direct or indirect shareholders of the Relevant German Guarantor or Subsidiaries of such shareholders (with the exception of Subsidiaries which are also Subsidiaries of the Relevant German Guarantor) and provided that (B) such obligations do not correspond to funds that have been on-lent to, or otherwise been passed on to, or issued for the benefit of, the Relevant German Guarantor or any of its Subsidiaries the limitation as set out in clause (ii) below shall apply. In relation to any other Guaranteed Obligations, the Guarantee of the Relevant German Guarantor remains unlimited.

(ii) Subject to paragraph (i), the Administrative Agent agrees not to enforce any amount under the Guarantee which is higher than the Realisable Amount.

(iii) “ Realisable Amount ” shall mean an amount of the proceeds resulting from the enforcement of the Guarantee which may be applied towards the Guaranteed Obligations without having the effect of:

(A) reducing the Relevant German Guarantor’s net assets (Nettovermögen) (or, in case of a GmbH & Co. KG, the net assets of the general partner of the Relevant German Guarantor (the “ Net Assets ” ) to an amount less than its stated share capital (Stammkapital) ; or

(B) if the Net Assets are already an amount less than the stated share capital of the Relevant German Guarantor causing such amount being further reduced,

and thereby affecting the assets required for the preservation of the stated share capital according to Sects. 30, 31 German Limited Liability Companies Act (GmbHG) (the “ Capital Impairment ” ).

(iv) The value of the Relevant German Guarantor’s (or, in case of a GmbH & Co. KG, of its general partner’s) net assets shall be determined in accordance with the principles for ordinary bookkeeping and the preparation of balance sheets as they were consistently applied by the Relevant German Guarantor in preparing its unconsolidated balance sheets in the previous years and shall be calculated as an amount equal to the sum of the values of

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the Relevant Guarantor’s assets (consisting of all assets which correspond to the items set forth in section 266 sub-section (2) A, B and C of the German Commercial Code (Handelsgesetzbuch) less the aggregate amount of the German Guarantor’s liabilities (consisting of all liabilities and liability reserves which correspond to the items set forth in section 266 sub-section (3) B, C and D of the German Commercial Code). When determining the Relevant German Guarantor’s or its general partner’s net assets, the following shall apply:

(A) the amount of any increase of the stated share capital (Stammkapital) of the Relevant German Guarantor or its general partner after the date of this agreement, effected without the prior written consent of the Administrative Agent, shall be deducted from the Relevant German Guarantor’s or its general partner’s stated share capital (Stammkapital) ;

(B) loans provided to the Relevant German Guarantor which are subordinated according to a qualified subordination ( qualifizierter Rankrücktritt ) shall be disregarded; and

(C) loans and other liabilities incurred by the Relevant German Guarantor in wilful or grossly negligent violation of the provisions of any Loan Document shall be disregarded.

(v) Upon the written request of the Administrative Agent, the Relevant German Guarantor shall for the purposes of the determination of the Realisable Amount, dispose of all assets (other than real estate) at market value which are not necessary for the Relevant German Guarantor’s business ( nicht betriebsnotwendig ) and are shown in the balance sheet of the Relevant German Guarantor with a book value (Buchwert) which is significantly lower than the market value of such assets.

(vi) The limitations set out in paragraphs (i) and (ii) above shall only apply if and to the extent that:

(A) within ten (10) days following a notice of realisation of the Guarantee to the Relevant German Guarantor by the Administrative Agent (the “ Relevant Date ”), the managing director(s) on behalf of the Relevant German Guarantor has demonstrated in writing to the Administrative Agent (x) to what extent the Guarantee is an up-stream or cross-stream security and the secured Guaranteed Obligations do not correspond to funds that have been on-lent to, or otherwise passed on to, the Relevant German Guarantor or any of its Subsidiaries; and (y) that amount by which the proceeds from the enforcement would exceed the Realisable Amount; and such demonstration is supported by evidence satisfactory to the

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Administrative Agent (the “ Management Determination ” ) and the Administrative Agent has not contested this; or

(B) within thirty (30) days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent is provided with a determination of the Realisable Amount as of the last day of the calendar month ending before the Relevant Date which is prepared by auditors of international standard and reputation (the “ Auditor’s Determination ”) appointed by the Relevant German Guarantor with the consent of the Administrative Agent. Absent manifest error, such determination shall be binding on all parties.

(vii) If the Guarantee were enforced without limitation because the Management Determination was not delivered within the relevant period of time or contested by the Administrative Agent, the Administrative Agent shall repay upon written demand by the Relevant German Guarantor to the Relevant German Guarantor any amount which is necessary according to the Auditor’s Determination to cure the Capital Impairment (calculated as of the date of the relevant demand) provided such demand for repayment is made to the Administrative Agent within 6 months ( Ausschlussfrist ) from the date the Guarantee has been enforced.

(viii) If the Relevant German Guarantor demonstrates that an enforcement of the Guarantee has, despite the fact that its liability is limited pursuant to paragraph (ii) above, the effect of the Relevant German Guarantor not being able to pay its debts as they fall due ( Verlust der Zahlungsfähigkeit ), then the payment obligation of that Relevant German Guarantor under this Guarantee shall be limited in such way that the Agent may only enforce the Guarantee up to such amount(s) and at such times (for instance in payment installments) that the Relevant German Guarantor is at all times left with the liquidity necessary to remain able to pay its debts as they fall due ( zahlungsfähig ) in order to ensure the continued existence of the Relevant German Guarantor ( kein Existenzvernichtender Eingriff ).

(ix) If the Relevant German Guarantor invokes a limitation of its liability pursuant to paragraph (viii), then the Relevant German Guarantor shall promptly realize any and all of its assets that are not necessary for the Relevant German Guarantor’s business ( nicht betriebsnotwendig ), to the extent necessary to satisfy the amounts demanded under this Guarantee.

(x) The limitation set out in this clause (b) does not affect the right of the Administrative Agent to claim against any outstanding amount at a later point in time if and to the extent that the limitation set out in this clause (b) would allow such claim at that later point.

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(c) Any guarantee provided hereunder by any Dutch Guarantor shall be limited to the extent required so that such guarantee does not constitute a breach of the financial assistance prohibitions contained in Section 2:207c or 2:98c, as applicable, of the Dutch Civil Code (the “ Prohibition ”). For the avoidance of any doubt it is expressly acknowledged that the relevant Dutch Guarantors will continue to guarantee all such Guaranteed Obligations which, if included, do not constitute a violation of the Prohibition.

(d) The guarantee provided hereunder by the Swiss Guarantor shall be limited as follows:

(i) If and to the extent the Guaranteed Obligations are not the primary obligations of the Swiss Guarantor or the primary obligations of the direct or indirect subsidiaries of th