I think that's an absolutely crazy way to try to avoid an 83(b) election. I would never want my stock locked up behind a dubious "liquidity event" requirement for vesting.

So you work for a startup for 10 years since inception, it's private all the time, you get annual grants for more and more options, building up options for 5% of the fully diluted shares, but then get disabled and have to stop working. Now you lose all your options because none of them have vested because the company didn't sell yet?

It's combined with a stipulation that you are still entitled to the shares whose "time-based condition" has been met, and will be granted them upon any liquidity event even after leaving the company.

Yeah, so Zynga did this... it's complicated and has many pitfalls. For example, their options expired after 7 years. There's also much debate around if the liquidity event can reasonably be construed as a legitimate "performance condition", and whether you have to start accounting for (and paying tax on) the otherwise vested shares once you can reasonable foresee a future liquidity event, not just after said liquidity event actually occurs.

https://www.sec.gov/Archives/edgar/data/1439404/000119312511...

It doesn't have to be solely a performance condition.

I don't think it would be hard to prevail on the facts arguing that a requirement for an IPO (or similar liquidity event) is wholly out of the employee's control and that a substantial risk of that not happening occurs up until the moment that it actually happens. IPOs fall apart/are withdrawn and mergers fail frequently enough that a substantial risk argument could probably be sustained.