If you are "laid off" your employment is terminated and you exercise anything that has vested up until that day. End of discussion.
If you are an employee while the company is filing for their IPO and expect to be an employee at time of IPO (or sale of company) - standard operating procedure at 95+% of start ups in Silicon Valley and elsewhere is you have the OPTION TO EXERCISE all vested shares and portions thereof.
Your unvested shares continue to vest per your original employee agreement. Allow me to repeat that for you. As an active employee, your UNVESTED OPTIONS CONTINUE TO VEST.
Threatening an employee with termination post fact or taking away unvested options while maintaining employment is a scumbag move.
Pincus & Co. damn well better be sure that management documented all of this "poor performance" in writing or not only will this blow up in their face, but they will end up paying court costs, lawyer fees and the employees they scammed.
You do not change the rules of the game at the end of the game.
First, if you are employee #5 at any start up and offered a heavy option stake in exchange for a below market salary, you take on massive risk of ending up with nothing. If the company does take off, employee #5 will always technically be "demoted" as professional managers and executives arrive and create a more formal corporate structure.
Second, if the company is about to go public or be purchased, it is customary (and fully expected) to allow all employees to purchase their unvested shares at the current strike price. Ask anyone who has been there. Saying that employees were "under-performing" is total bullshit and nobody in the valley is buying it
The greed and predatory business practices of Mark Pincus and his short sighted executive team just soiled the entire idea of taking stock options in exchange for salary. Future employees will be more inclined to politely refuse options in exchange for a market rate salary.