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Liquidity Events

Liquidity events transform the potential value of private company equity into realized returns that can be distributed within the Backerville ecosystem.

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📋 Overview

Liquidity Event Flow
Backerville’s promissory note structure is designed to activate upon specific liquidity events. These events transform the potential value of private company equity into realized value that can be distributed within the village ecosystem.

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🚀 Triggering Events

Initial Public Offering

Company lists on public exchange, often with employee lock-up periods

Acquisition/Merger

Company is acquired by another entity for cash, stock, or mixed consideration

Secondary Sale

Company-approved secondary transactions or tender offers

Other Liquidity

Any event creating transferability or liquidity for employee shares

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Primary Triggering Events

  • Initial Public Offering (IPO)
  • Direct Listing
  • Acquisition or Merger
  • Secondary Sale Opportunity
1

Public Registration

Company files registration statement with SEC
2

Trading Begins

Shares begin trading on public exchange
3

Lock-up Expiration

Typically 180 days before employee shares become eligible for sale
4

Promissory Note Activation

Obligation activates when shares become sellable

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📢 Notification & Activation Process

Activation Timeline per Promissory Note Agreement
When a triggering event occurs, the process follows the terms specified in the promissory note agreement:
1

Contributor Notification

Within 5 calendar days of a Triggering Event or awareness of a pending Triggering Event, the Contributor must notify the Administrator
2

Delivery Method Selection

The Contributor selects from available delivery methods:
  • For equity: Direct Share Transfer, Proceeds Transfer, or Hybrid Approach
  • For tokens: Direct Token Transfer, Proceeds Transfer, or Hybrid Approach
3

Delivery Execution

The Contributor completes the delivery within the earlier of:
  • 30 calendar days following the Triggering Event; or
  • 5 calendar days after receiving liquid proceeds
4

Reconciliation

Administrator verifies the delivery and updates Village records accordingly

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🔄 Delivery Options

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Traditional Equity

  • Direct Share Transfer: If permitted by the Issuer, transferring the actual Committed Shares
  • Proceeds Transfer: Delivering the cash proceeds from the sale of Committed Shares
  • Hybrid Approach: A combination of shares and proceeds as agreed upon

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Blockchain Tokens

  • Direct Token Transfer: Transferring tokens to the Village’s designated wallet
  • Proceeds Transfer: Delivering cash proceeds from token sales
  • Hybrid Approach: A combination of tokens and proceeds as agreed upon
Failure to comply with notification and delivery requirements may trigger default remedies as specified in the promissory note agreement.

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⚠️ Special Circumstances

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Lock-up Periods

For IPOs with employee lock-up periods:
  • The obligation activates upon expiration of the lock-up
  • Contributors must still provide advance notification of the IPO
  • Delivery deadline extends to match the lock-up expiration plus the standard delivery window
If lock-up periods have staggered releases (e.g., 25% at 90 days, 25% at 180 days), the obligation follows the same schedule proportionally.

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Partial Liquidity

When only a portion of shares become liquid:
  • The obligation applies proportionally to the liquid portion
  • Future liquidity events trigger the remaining obligation
  • Detailed record-keeping tracks partial satisfactions
Example: If a contributor promised proceeds from 10,000 shares, but only 4,000 shares (40%) become liquid in an initial event, then:
  • 40% of the obligation activates immediately
  • 60% remains dormant until future liquidity events

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Non-Cash Consideration

For acquisitions with non-cash consideration (stock, earnouts, etc.):
  • Stock-based consideration may be delivered in-kind if liquid, or proceeds delivered after sale
  • Earnouts and contingent payments are delivered when received
  • For complex consideration, a fair market value determination may be required
The administrator may establish specialized procedures for unique forms of consideration, such as cryptocurrency or unusual financial instruments.

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Documentation Requirements

Transaction Evidence

Official documentation of the triggering event (merger agreement, IPO prospectus, etc.)

Valuation Documentation

Information establishing the value of the shares at the time of the event

Transfer Records

Documentation of the actual share sale or transfer (brokerage statements, etc.)

Payment Confirmation

Evidence of proceeds delivery to the village
This comprehensive framework ensures that when liquidity events occur, value flows efficiently from individual contributors to the broader village ecosystem, enabling all members to benefit from the collective upside.