NON QUALIFIED STOCK OPTION AGREEMENT

Exhibit 10.12

WHEREAS , pursuant to the Stock and Asset Purchase Agreement (the “ Purchase Agreement ”) made and entered into as of the 14 ^th day of September, 2006, by and between General Electric Company, a New York corporation (“ Seller ”) and the Company (formerly known as Nautilus Holdings Acquisition Corp.), the Company has purchased the stock of certain affiliates and subsidiaries of the Seller (the “ Transaction ”);

WHEREAS, the Company, acting through the Committee with the consent of the Company’s Board of Directors (the “ Board ”) has agreed to grant to the Optionee, effective on February 28, 2007 (the “ Grant Date ”), an option under the Momentive Performance Materials Holdings Inc. 2007 Long-Term Incentive Plan (the “ Plan ”) to purchase a number of shares of Common Stock on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS , the Optionee purchased shares of the Company’s common stock pursuant to a subscription agreement dated February 28, 2007 (the “ Subscription Agreement ”) and in connection therewith, became a party to the Amended and Restated Securityholders Agreement relating to the Company, by and among the Company and certain of its securityholders, dated as of December 3, 2006, as the same may be amended from time to time (the “Securityholders Agreement”), or an adoption agreement thereto in the form attached as Exhibit A thereto (an “Adoption Agreement”);

WHEREAS , future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1. The Plan . The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of this Agreement shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement, as the case may be.

Section 2. Option; Option Price . Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the “ Option ”) to purchase Shares pursuant to Tranche A options (“ Tranche A Options ”), Tranche B options (“ Tranche B Options ”) and Tranche C Options (“ Tranche C

Options ”) at the price per Share (the “ Option Price ”) and in the amounts set forth on the signature page hereto. To the extent permitted by the Committee, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code.

Section 3. Term . The term of the Option (the “ Option Term ”) shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan (including, without limitation, Article V of the Plan) or this Agreement.

Section 4. Vesting . Subject to the Optionee’s not having a Termination of Relationship prior to the applicable vesting date and except as otherwise set forth in Section 7 , the Options shall become non-forfeitable and exercisable (any Options that shall have become non-forfeitable and exercisable pursuant to Section 4 , the “ Vested Options ”) according to the following provisions:

(a) Tranche A Options . Twenty-percent (20%) of the Tranche A Options shall become Vested Options on each of the 14 ^th , 24 ^th , 36 ^th , 48 ^th and 60 ^th month anniversaries of the Closing Date (as defined in the Purchase Agreement). In the event of the consummation of a Change in Control upon which the Tranche B Targets (as defined in Section 4(b) below) are met, 50% of the Tranche A Options which have not theretofore become Vested Options and which are scheduled to vest on each of the remaining vesting dates based on anniversaries of the Closing Date will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 12 months after such Change in Control or (ii) a Termination of Relationship by the Company or its Subsidiaries without Cause within 12 months following the consummation of such Change in Control. In the event of the consummation of a Change in Control upon which the Tranche C Targets (as defined in Section 4(c) below) are met, each Tranche A Options which has not theretofore become a Vested Options and which are scheduled to vest on each of the remaining vesting dates based on anniversaries of the Closing Date will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 12 months after such Change in Control or (ii) a Termination of Relationship by the Company or its Subsidiaries without Cause within 12 months following the consummation of such Change in Control. In all cases involving the consummation of a Change in Control, any Tranche A Options that are not subject to the special rules set forth in the two preceding sentences shall vest in accordance with the terms of the first sentence of this Section 4(a).

(b) Tranche B Options . All of the Tranche B Options shall become Vested Options and shall become exercisable on the date that the Investor IRR is equal to or exceeds 20% (the “ Tranche B Targets ”).

(c) Tranche C Options . All of the Tranche C Options shall become Vested Options and shall become exercisable on the date that the Investor IRR is equal to or exceeds 25% (the “ Tranche C Targets ”).

All decisions by the Committee with respect to any calculations pursuant to this Section 4 (absent manifest error), including the Investor IRR and the date the Investor IRR is equal to or

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exceeds the applicable targets, shall be final and binding on the Optionee. Except as otherwise provided herein all unvested Options will immediately terminate upon a Termination of Relationship.

Section 5. Restriction on Transfer/Securityholders Agreement . The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board or the Committee, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6. Optionee’s Employment . Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7. Termination .

(a) The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i) the tenth anniversary of the Grant Date;

(ii) the 180 ^th day following the Termination of Relationship in the case of a Termination of Relationship for death or Disability;

(iii) the 90 ^th day following the Termination of Relationship in the case of a Termination of Relationship without Cause or by the Optionee for any reason, including if the Optionee has retired and is at least 55 years old; and

(iv) the day of the Termination of Relationship in the case of a Termination of Relationship with Cause.

(b) Except as otherwise provided in Section 4(a) and 4(b) of this Agreement, upon a Termination of Relationship for any reason, the unvested portion of the Option ( i.e. , that portion which does not constitute Vested Options) shall terminate on the date the Termination of Relationship occurs.

Section 8. Securities Law Representations . The Optionee hereby represents and warrants to the Company as set forth on Attachment A hereto.

Section 9. Designation of Beneficiary . The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The

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Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 11 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10. Condition Precedent . If the Transaction is not consummated, the Company will not grant the Optionee the Option and this Agreement shall become null and void.

Section 11. Notices . All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to it at:

If to the Company, to:

Momentive Performance Materials Holdings Inc.

187 Danbury Road,

Wilton, Connecticut 06897

Facsimile: (203) 761-1991

Attention: General Counsel

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Facsimile: (212) 515-3264

Attention: Stan Parker

and

Wachtell, Lipton, Rosen & Katz

51 West 52 ^nd Street

New York, New York 10019

Facsimile: (212) 403-2269

Attention: Andrew J. Nussbaum, Esq.

If to the Optionee, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of

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nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 12. Waiver of Breach . The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 13. Optionee’s Undertaking . The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 14. Modification of Rights . The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Options granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 15. Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 16. Restrictive Covenants . The grant, vesting and exercis