You will not be expected to pay anything if the company goes under. You will only pay a cut of your profit if there is a liquidation event.
I am collecting data to validate my hypothesis that this will be a win-win situation (e.g. you will save a lot of money due to taxes if you exercise early) for both the company and the customers of the company. If you could fill out the form here: https://airtable.com/shrebenwVzaeFzols, I would really appreciate it.
Thank you for taking the time out of your day to fill this out. Any feedback is welcome.
I ask because I entertained the possibility of accepting a similar deal in the past, with a company that was offering a loan covering exercising and AMT costs in exchange for ~50% of the equity upside, with “no downside” for me (they would implement this by forgiving the loan). However, it turns out that a forgiven loan is a very much taxable event for the IRS, so in the worst case I would still have had to pay significant money (e.g. 30-40% of my forgiven loan, since the forgiveness is taxed as regular income).
After crunching some numbers, I decided to come up with the exercise and AMT money upfront myself. Hadn’t been for the loan forgiveness taxation, I would have probably taken the deal, so if your idea is able to fix this, you might be on to something.